Irish property fund IPUT has told its investors that it expects to secure an additional annualised €15 million in rent from lettings associated with four new developments in central Dublin that will add 250,000sq ft of commercial space to its portfolio this year.
In turn this will give the company the scope to pay an annual dividend of €100 million a year to its investors from 2019 onwards.
The rent will come from lettings associated with two prime properties on Molesworth Street (numbers 10 and 40), near Leinster House, the Exchange building in the IFSC, and a retail unit on Grafton Street.
The average rent recorded would be about €60 per square foot, which is around the peak level achieved for Dublin offices before the property crash.
"There has been a serious uptick in interest in buildings be it Brexit or local demand. There's been a real step-up in the past six weeks," IPUT's chief executive Niall Gaffney told The Irish Times.
He said the company’s buildings have been shortlisted by two potential Brexit movers to Ireland, which could come to fruition in the near future, with Dublin regarded as a “safe haven” for doing business amid the uncertainty of the UK’s exit from the EU.
Cash dividends
IPUT collected €85.5 million of contracted rental income in 2016, representing a 100 per cent recovery rate. And it paid out €82 million to shareholders through quarterly cash dividends, a 3.4 per cent increase on 2015.
The annual dividend of €42 per share was in line with the average payment over the past three years, and is expected to rise to €50 a share by 2019, an increase of 19 per cent.
Mr Gaffney expects IPUT to pay out more than €1 billion in dividends over the next decade, having paid out about €500 million over the past 10 years.
“I think that is a realisable objective, especially given the pipeline of quality offices that we have coming on stream.”
IPUT held its agm in Dublin on Thursday, with chairman John Mulcahy telling investors that the fund's net asset value had reached €2 billion in 2016, and that it recorded a total property return of 12 per cent.
Mr Mulcahy told investors that IPUT had accepted an additional €111 million of fresh equity from new and existing shareholders, and have demand for further investment, which would be drawn into the unlisted plc fund as opportunities arose.
Eight assets
“We have successfully deployed over €148 million across eight assets during the year, and we continue to focus our attention on assets where we have an existing presence or where we see the real potential to add value,” he said in his statement in the annual report.
Commenting on the outlook, Mr Mulcahy said: “We can see uncertainty in the next 24 months. While these developments present their own challenges, some of these should be to our benefit.
“As expectations of interest rate rises drift out further, our dividend yield of 4 to 5 per cent over the coming years will remain attractive for our shareholders. We remain confident about maintaining strong recurring dividends for our shareholders in the medium and long term.”
