Iput secures €150m credit facility to fund development projects

Irish property fund Iput has secured a €150 million revolving credit facility from US lender Wells Fargo to help finance its various development projects while also maintaining its dividend policy for investors.

This emerges in its annual report, which has been released to coincide with its AGM in Dublin today.

"This will assist in managing the dividend policy, which is to provide a consistently strong income yield for Iput's shareholders while the redevelopment projects are in progress," Iput chairman Frank Close said in his annual statement.

The three-year facility was put in place in January with some €52.7 million already drawn down.

Iput has been highly acquisitive in recent years, spending €163 million on properties in 2015.

This included €80.5 million for a 70.8 per cent interest in the Riverside One building on Sir John Rogerson’s Quay in Dublin, and €21.3 million for a retail portfolio located on Grafton Street, Henry Street and O’Connell Street in the capital.

In January, it spent €42 million on the acquisition of a site in The Park, Carrickmines, Dublin 18.

After-tax profit

Iput’s accounts show it made an after-tax profit of €333.2 million last year, up €33 million on the previous year. Its income profit amounted to €82 million while its capital surplus was €251 million.

The fund’s rents last year amounted to €85.8 million, an increase of 36 per cent on 2014. “This provided a net income return on the net asset value of Iput’s property portfolio of 5.01 per cent,” Mr Close said.

Its dividend payment to shareholders amounted to €79.2 million, an increase of almost €19 million on 2014.

Mr Close's statement also informed shareholders that he would be stepping down as chairman after 10 years in the role and would be replaced by deputy chairman John Mulcahy, a former executive with the National Asset Management Agency.

He said the first four months of 2016 have seen “continued momentum” for Iput’s portfolio with “good progress on its redevelopment projects”.

“We foresee another year of satisfactory growth in 2016 as the commercial property market continues to grow on the back of higher rental values and increased occupier demand,” he said.

‘Under no illusions’

In his statement, chief executive Niall Gaffney said the fund was "under no illusions" that it would need to be "disciplined and prudent" in its approach to managing and deploying shareholders capital in order to maintain its growth levels.

“As the Dublin market enters a more mature phase of the cycle, Iput is well placed to provide the long term investors with stable income returns,” he said. “We anticipate that yield compression will stabilise in 2016 with capital growth further moderating in 2017.”

Mr Gaffney said that with 30 per cent of its income subject to a rent review over the next 24 months, the fund anticipates “substantial realisation of rental growth” over the period.

The report shows that Iput had 94 properties valued at €1.75 billion at the end of 2015. Two thirds of these were offices, with all bar 1 per cent of the portfolio located in Dublin.

Just under half of Iput’s shareholders are Irish institutional pension schemes, with 24 per cent European institutional investors and 19 per cent Irish investment managers. The balance are either Irish charities or universities or US investors.