Hibernia REIT plc Trading Update

Hibernia REIT plc Trading Update

Hibernia REIT plc ("Hibernia") issues a trading update relating to the period from 1 April 2019 to date, ahead of its Annual General Meeting being held at noon today.

Highlights

·    Majority of vacant space in office portfolio now under offer to occupiers: if all completes the vacancy rate will fall to 5%

·    Eight rent reviews settled or agreed, increasing contracted annual rent by €1.7m, two rent reviews outstanding with reversionary potential of €1.4m per annum

·    2 Cumberland Place development remains on track to complete in the first half of 2020

·    €15.3m invested in property acquisitions

Market update

The quantum of Dublin office space leased in the first half of 2019 exceeded 1.7m sq. ft. (H1 2018: 1.6m sq. ft.) with well over half of this coming from transactions of 50,000 sq. ft. or greater.  Take-up in the quarter ended June 2019 was lower than in recent quarters, principally due to there being fewer large transactions: in total 0.4m sq. ft. was taken up and only one letting exceeded 50,000 sq. ft. in size.  Nonetheless active demand remains high and a number of lettings are expected to close in the near term.  Office vacancy at the end of June 2019 was 5.9% for Grade A space in central Dublin and 6.4% for Dublin overall.  Prime Grade A headline rents in the city centre are stable at in excess of €60 per sq. ft. (source: Knight Frank). 

Investment demand also continues to be strong, with large transactions in the office and residential sectors in the first half of 2019 and Irish investment volumes totalled €1.8bn (H1 2018: €1.9bn).  Prime offices in central Dublin continue to transact at yields around 4% (source: Knight Frank).

Acquisitions and disposals                                                                                                                          

In July 2019 we acquired a 3.8 acre property in the Malahide Road Industrial Estate, D17, for €7.9m.  The property has 66,000 sq. ft. of warehousing and 17,000 sq. ft. of ancillary office accommodation and is occupied by Bunzl Irish Merchants on a lease expiring in early 2020, generating annual rent of €0.4m.  In the longer term we believe there is potential for the property to be re-zoned to allow higher value uses.  Since 31 March 2019 we have also invested €7.4m in several other acquisitions, most of which are assets adjacent to our existing properties and were purchased with vacant possession. 

No disposals were made in the period.

Developments and refurbishments

Work on 2 Cumberland Place, D2, is on track with the project scheduled for completion in the first half of 2020. 

Asset management       
The vacancy rate in our in-place office portfolio is 15%, up from 12% at 31 March 2019 following two tenants moving out of 19,000 sq. ft., as flagged in the preliminary results in May, and the acquisition of 10,000 sq. ft. of vacant offices.  The majority of the available space is in the Forum, Central Quay and the recently completed 2WML.  Since 31 March 2019 we have made good progress with leasing discussions: if all the space currently under offer completes, the vacancy rate in the in-place office portfolio will fall to 5%.

Since 31 March 2019 we have settled six office rent reviews over 44,000 sq. ft., all of which settled at or above estimated rental value ("ERV"), generating an uplift in contracted rent of €1.2m per annum (+92%).  A further two office rent reviews over 19,000 sq. ft. have terms agreed, with an aggregate increase in contracted rent of €0.5m per annum (+100%).  Two office rent reviews over 60,000 sq. ft. are outstanding with ERV in excess of current passing rents by €1.4m per annum.               

Share buyback 
Since starting the €25m share buyback programme on 2 April 2019 9.7m shares have been acquired for aggregate consideration of €13.8m, representing an average price per share of €1.41.         

Balance sheet  
At 30 June 2019 Hibernia had net debt of €199m and cash and undrawn facilities of €196m.  Net of committed expenditure and payment of the final dividend of 2.0c per share on 2 August 2019, cash and undrawn facilities totalled €127m.

Kevin Nowlan, Chief Executive Officer of Hibernia, said:               

"Tenant take-up in Dublin offices in the first half of 2019 exceeded 1.7m sq. ft., a modest increase on the first half of 2018, and active demand continues to be strong with a number of letting transactions expected to close soon.  Investment demand also remains high and volumes in the first half totalled €1.8bn. 

"As noted in our preliminary results in May, two of our key near term priorities are reducing the vacancy rate in our office portfolio and concluding the active rent reviews.  With the majority of our vacant space now under offer and eight of the nine rent reviews outstanding at 31 March 2019 now agreed, we are making good progress on both fronts.

"We have continued recycling our capital into new opportunities, agreeing several acquisitions for total consideration of €15.3m since 31 March 2019, all of which enhance our existing interests or have potential for significant future investment.  Hibernia is well positioned with an experienced management team, an extensive pipeline of accretive development projects and a well-capitalised balance sheet."

ENDS

Contacts:

Hibernia REIT plc +353 1 536 9100

Kevin Nowlan, Chief Executive Officer

Tom Edwards-Moss, Chief Financial Officer

Murray Consultants

Doug Keatinge: +353 86 037 4163, dkeatinge@murraygroup.ie

Jill Farrelly: +353 87 738 6608, jfarrelly@murraygroup.ie

About Hibernia REIT plc

Hibernia REIT plc is an Irish Real Estate Investment Trust ("REIT"), listed on Euronext Dublin and the London Stock Exchange.  Hibernia owns and develops property and specialises in Dublin city centre offices.