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News : International Last Updated: Dec 11, 2013 - 1:18 PM


Markets: Hibernia REIT raises €365m from listing on the Irish market
By Finfacts Team
Dec 11, 2013 - 1:13 PM

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Left-Right: Directors of Hibernia REIT; Terence O’Rourke, Stewart Harrington, Daniel Kitchen (chairman), Colm Barrington, William Nowlan

Hibernia REIT has raised €365m from Irish and international investors as a result of listing on the Irish market.

Hibernia REIT is the second REIT (real estate investment trust) to be launched in Ireland and to list on the ISE (Irish Stock Exchange). Its shares will trade under the ticker HBRN and it is included in relevant ISEQ indices.

The company's stated objective is to assemble a portfolio of attractively-located, primarily institutional-quality, income-producing properties in Ireland, mainly in the commercial space and in the greater Dublin area.

Michael Noonan, finance minister, said: “I welcome the launch of Hibernia REIT, Ireland’s second REIT, less than a year after I announced the introduction of the tax framework in December 2012. This will bring further investment capital to the Irish property market, and will also provide increased choice for investors. I have introduced a number of supply side initiatives in recent years to support the recovery of this sector and there are real signs of life starting to return – particularly on the commercial property side in Dublin and other cities”.

Deirdre Somers, chief executive of the ISE, said: “This is the fourth major listing on the ISE’s equity markets in recent months and we are delighted to provide a platform to allow investors in Ireland and around the world to invest in Hibernia REIT.

The addition of Hibernia REIT is yet another example of the strong appetite among investors for equity investments in Ireland and Irish businesses and also highlights the effectiveness of Ireland’s new REITs legislation.”

Kevin Nowlan, chief executive of Hibernia REIT, said: “We believe a unique opportunity exists in Ireland to build an attractive property investment portfolio in light of current property values, the supply of assets on the market and the outlook for rents. We intend to create both sustainable income and strong capital returns for the company and its shareholders.

We are pleased to be listing on the Irish Stock Exchange. Dublin is a highly attractive place to do business and we acknowledge the support of the Irish government for introducing REIT structures in Ireland and the ISE for its support in enabling our listing.”

Glanbia: Mixed messages for Glanbia’s JVs; Liam Igoe of Goodbody, comments - - " PZ Cussons said in its trading update today that its Nutricima JV with Glanbia in Nigeria has seen “strong revenue growth”. However, it also notes that profitability has been impacted by the high cost of milk.

Separately Fonterra, the New Zealand dairy enterprise, has commented that it cannot keep up with demand for milk powders from China and other developing nations for milk powders. It noted that demand and pricing is stronger for whole milk powders (+57%) and skim powders (+34%) than for cheese (+30%) & casein (+31%).

Nutricima has been struggling to make a profit for some time now and even our modest €1.5m contribution for the current year looks like it may be called into question. However, this business is insignificant in a Group context. In contrast the continuing surge in demand for dairy products should be positive for Glanbia Irish dairy JV, GIIL."

FBD Holdings: Average farm incomes expected to rise by 13% next year; Eamonn Hughes of Goodbody comments - - "Farmer incomes are forecast to rise by 13% in 2014 according to the Teagasc (The Irish Agriculture and Food Development Authority) annual report and reported in today’s Irish Times. The estimate is based on the assumption of normalised weather and lower feed, fertilizer and diesel prices. Average incomes fell by an average of 1% this year following a mixed period (fodder crisis in winter and a very good summer) which led to higher feed and fertiliser use, adversely affecting livestock farmers. 2013 has been a mixed year for farmers following the fodder crisis in winter and the warm summer. Based on normalised weather in 2014 and increased investment in dairy equipment ahead of the ending of the milk quotas in 2015, this should have positive implications for average premiums at FBD, where direct farm related premiums are c.20% of total. Our forecast reflect 3% premium growth for the FBD book as a whole."

Conall Mac Coille, chief economist at Davy, comments - - "Stock indices fell on Tuesday. The Euro Stoxx 50 fell by 0.9% and the S&P 500 by 0.3%. The key news on the day was that US job openings rose to 3.925m, their highest level in five years. However, equity markets fell with investors worrying that the favourable jobs data would increase the probability of the Fed tapering at its December meeting.

A wild card in the tapering debate has been the outcome of negotiations between Democrats and Republicans this month. The announcement last night of a budget deal between senior figures on both sides will ease concerns of a new government shut-down in January. However, US 10-year yields fell by 4bps to 2.8% on Tuesday. The US dollar also fell to its lowest level in weeks against the euro at $1.377. So, market moves were not entirely consistent with investors expecting the Fed to taper at its December meeting."

Banks: PTSB indicates it will be taking additional provisions post Balance Sheet Assessment; Eamonn Hughes and Colm Foley of Goodbody comment - - "Speaking to the Irish Times yesterday, the CEO of PTSB indicated that the bank would be taking extra provisions on foot of the Central Bank’s Balance Sheet Assessment. The banks got their results about 10 days ago and at that time PTSB indicated that the outcome confirmed that the capital position of PTSB was above minimum regulatory standards. The CEO has not indicated the scale of additional provisions, suggesting the uptick will be reflected in the upcoming FY13 results.

Last June, PTSB had €3.6bn of provisions on the balance sheet (10.7% of loans) of which €2.55bn related to the Irish mortgage portfolio (10.5% of loans). The PTSB CEO has indicated that the additional provisions are “prudence on prudence”. He added that the current restructuring plan with the EU envisages the core bank turning pre-provision profitable at some stage in 2014 and the business as a whole (also including its asset management unit and UK business) returning to net profits in 2017.

AIB has not given any indication of its position post the Balance Sheet Assessment though the comment that PTSB will consider additional provisions will keep the focus on the 2013 bad debt charge at the banks. Whilst BOI has released the headline figures from the Balance Sheet Assessment, to date it has played down the need for any additional provisions. Notwithstanding this, our impairment figure and balance sheet reflects an additional €500m of provisions and c.€3.5bn of risk weighted assets."

Economic View: Important details yet to be ironed out on banking union; Dermot O'Leary, chief economist at Goodbody comments  -- "Despite some progress, talks between EU finance ministers on banking union broke up last night without agreement on some significant details. Based on media reports, it also appears that some of the compromises being hammered out will mean that the form of banking union agreed will be sub-optimal.

Firstly, it appears that the European Commission will not be the final arbiter of whether a bank should be closed down. Instead, the EC will sit on a board as a “key decision maker”. If it disagrees with a board decision on a bank wind-down, the proposal is that it will then refer this to Ecofin, introducing a political dimension to the process. Not only that, but any approval of large scale funds would require a two-third majority, with the votes weighted by the ECB’s capital key. This means that the larger countries will be able to block proposals by the smaller countries. Secondly, there is no mention of the ESM being used to recapitalise banks, which is somewhat concerning in light of possible capital requirements in some banks following next year’s stress tests.

It appears to us that while some progress is being made in relation to solving the next European banking crisis, whenever that is, policymakers are still unwilling to implement the proposals to deal with the current one. In this regard, the bail-in rules are expected to come into force in January 2016, but that is too late to deal with any situation that may emerge in next year’s AQR and stress tests. Next week is potentially important, with a eurogroup meeting on Tuesday night, Ecofin on Wednesday night and an EU summit on Thursday. Who said the crisis was over?"

US Markets

In New York Tuesday the Dow fell 53 points or 0.33% to 15,973.

The S&P 500 slid 0.32% and the Nasdaq slipped 0.20%.

US benchmark updates

Asia Markets

The MSCI Asia Pacific Index dropped 0.6% on Wednesday.

Japan's Nikkei 225 fell 0.62%; China's Shanghai Composite slid 1.49%; South Korea's KOSPI declined 0.78%; Australia's S&P/ASX 200 lost 0.76% and in Mumbai, the Bombay Stock Exchange the S&P BSE India Sensex Index dipped 0.39%.

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600 is up 0.274% in early afternoon trade Wednesday.

In Dublin, the ISEQ  is up 0.22%

Hibernia REIT is down 1 cent or  0.93%.

European Benchmarks

Irish Share Prices

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies

The euro is trading at $1.3770 and at £0.8406.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 3.11%, to 1,619 points, Bloomberg report.

On Tuesday the BDI rose 54 points or 2.47% to 2,237.

Global rebalancing — the tanker scrapyard index?

Crude oil for January 2014 delivery is trading on the Chicago York Mercantile Exchange (CME/Nymex) at $98.36 down 15 cents from Tuesday's close. In London, Brent for January 2014 delivery is trading on the International Commodities Exchange at $108.89. The North Sea benchmark accounts for two-thirds of the global market.

Finfacts, July, 15, 2013: US West Texas Intermediate oil benchmark jumps in July - - margin between WTI and Brent falls.

Gold spot price

The spot price of an oz of gold is trading on the CME in Chicago at $1,257.00 down $4.10 from Tuesday's closing.

Gold had hit a record high of $1,921.15 a troy ounce on Sept 06, 2011.

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