Hibernia REIT plc ("Hibernia") (LSE:HBRN) In March 2017, we began to establish a position in Hibernia, which is an office REIT focused exclusively on central business districts in Dublin, Ireland. Although Hibernia has a market capitalization of less than EUR 1 billion, it is one of the dominant office property developer/owners in the fairly small office market of Dublin. Hibernia offers a reasonable return and is exceptionally well-capitalized. However, Hibernia has several things working in its favor prospectively. First, the company has a considerable development pipeline which is being met by strong and growing demand for Dublin office space. Second, the company's current income is very likely to benefit from rental reversions as older leases are re-priced at materially higher prevailing market prices. Finally, intuition and early movements from London, an office market facing considerable uncertainty, suggest that Dublin is a likely destination for some portion of Brexit-related corporate staff relocation. Dublin's small size and very low vacancy rates suggest that space in this market could come to be richly valued. Failing that scenario, we would expect to earn the reasonable status quo return.
From Third Avenue International Value Fund first quarter 2017 shareholder letter.
