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Green REIT PLC - INTERIM RESULTS

Tue, 26th Feb 2019 07:00

RNS Number : 0717R
Green REIT PLC
26 February 2019
 

 

 

INTERIM RESULTS FOR THE 6 MONTHS TO 31 DECEMBER 2018

 

Dublin, 26 February, 2019 - Green REIT plc, ("Green REIT" or the "Company"), the Irish property investment company, today announces its results for the six months ended 31 December 2018.

 

High quality portfolio delivering consistent returns

§ EPRA NAV per share up 2.2% to €1.83 per share, post payment of 2.7 cent per share dividend in October 2018. Increase of 3.7% gross of dividends paid in October 2018

§ 12.6% total return for the year to 31 December 2018 (year to 30 June 2018: 13.4%) based on growth in EPRA NAV and dividends paid

§ Profit for the period of €45.6 million (2017: €53.0 million) and EPS 6.5 cent (2017: 7.7 cent), reflecting moderating valuation uplifts Portfolio valued at €1,483 million (30 June 2018: €1,424 million), up 4.1% gross of capital expenditure

§ Property revaluation surpluses of €25.4 million (2017: €31.3 million)

§ EPRA Earnings of €21.7 million (2017: €22.1 million) or 3.1 cent per share (2017: 3.2 cent per share)

§ LTV remains low at 17.5% (30 June 2018: 15.5%), with undrawn facilities at period end of €101 million providing further capital for deployment into development pipeline

§ Interim dividend of 2.8 cent per share (2017: 2.6 cent interim dividend). Guidance of a dividend of 4% per annum on NAV post current development programme reaffirmed

 

Prime portfolio with income security of 8.7 years

§ WAULT of 8.7 years across the portfolio at 31 December 2018, maintaining a record high for the Company

§ 4% increase in contracted annual rent to €74.4 million (€71.7 million at 30 June 2018), or €75.5 million including the pre-letting agreement signed with Bunzl at Horizon Logistics Park

§ €2.9 million of new annual rent secured through 3 new lettings/pre-lettings on 12,900 square metres (139,100 square feet) signed in the period

§ Four rent reviews settled in the period, achieving a 37% (€0.8 million) annual rental uplift on the previous rent

§ Low EPRA vacancy rate of 3.5% (30 June 2018: 4.4%) at period end

§ 3% reversionary potential across the standing portfolio, or 7% across our Dublin city centre offices

 

€600 million accretive development pipeline

§ Strategic focus on NAV and income growth through development, supported by robust occupier demand and disciplined approach to capital allocation

§ Building I in Central Park, totalling 9,400 square metres (101,000 square feet) of office space, completing in Q1 2019. Top two floors reserved, with positive letting traction

§ Further €30 million invested in office and logistics developments (€19.9 million in offices, €10.1 million in logistics)

§ Completion of a unit at Horizon Logistics Park for a luxury goods retailer, adding €1.45 million to annual contracted rent

§ Construction of purpose-built unit of 10,700 square metres (115,000 square feet) for Bunzl commenced in February 2019

§ Two further units at Horizon Logistics Park due to complete in Q2 2019 (5,400 square metres/58,000 square feet)

§ €37 million of potential future rent from extensive future development pipeline, with a projected end value of €600 million

 

Strategic focus on prime offices and logistics

§ Portfolio dominated by offices (88% by value) and logistics (7% by value)

§ Target allocation to logistics in excess of 20% over the medium-to-longer term as Horizon Logistics Park, Ireland's premier logistics location, is developed out

§ Nine acres of additional land acquired at Horizon Logistics Park since 30 June 2018

 

Gary Kennedy, Chairman of Green REIT plc, commented: "The Company is well positioned to take advantage of further opportunities and to continue to deliver attractive risk-adjusted returns to its shareholders, underpinned by our high quality and well-located portfolio, the security of our income and our exciting development pipeline. While we remain alert to the prevailing wider economic and political uncertainty, Irish commercial real estate, particularly our sectors of focus, offices and logistics, continue to perform well."

 

Pat Gunne, Chief Executive of Green Property REIT Ventures, added: "The quality of our portfolio has never been stronger, and we continue to exploit value-accretive opportunities in both logistics and offices, through our active asset management and development programmes. The market remains supportive of our strategy, with prevailing values well-underpinned by healthy overseas and domestic demand for prime Irish commercial real estate."

 

Contacts

 

Green Property REIT Ventures DAC (Investment Manager to the Company)

Niall O'Buachalla, COO

+353 (0) 1 241 8400

 

FTI Consulting (IR and PR to the Company)

 

Dublin                                                                                                    London

+353 (0) 1 765 0800                                                                           +44 (0) 20 3727 1000 

Jonathan Neilan                                                                                   Giles Barrie

Patrick Berkery                                                                                     Claire Turvey

 

greenreit@fticonsulting.com 

 

Note on Forward-looking Statements

This Announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this Announcement. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.

 

CHAIRMAN'S UPDATE

Our strategy continues to deliver attractive risk-adjusted returns to shareholders through active asset management and property development, with a disciplined level of gearing.  

 

Summary financial information

Balance Sheet:

31 December 2018

30 June 2018

Change

Total property value

€1,483.2m

€1,424.4m

+4.1%

EPRA net assets

€1,279.5m

€1,251.2m

+2.3%

EPRA NAV per share

182.9 cent

178.9 cent

+2.3%

Property LTV

17.5%

15.5%

+2.0 pps

Income Statement:

6 months ended 31 December 2018

6 months ended 31 December 2017

Change

Rental income (excluding service charge income)

€34.4m

€33.7m

+2.1%

Profit for the period

€45.6m

€53.0m

-14.0%

EPRA Earnings

€21.7m

€22.1m

-1.8%

EPS - Basic

6.5 cent

7.7 cent

-14.6%

EPS - EPRA

3.1 cent

3.2 cent

-2.5%

(Note: Change calculations are based on unrounded actual numbers)

 

Further progress with office and logistics developments delivering returns and income growth

We look forward to the completion of Building I in Central Park in South Dublin in the first quarter of 2019, adding a further 9,400 square metres (101,000 square feet) to the business park. The top two floors of the 7-storey building are now reserved for a tenant, with a lease due to be signed imminently. Subject to further letting progress at Building I, we will assess further development opportunities at our landholding in Central Park, which is capable of accommodating an additional 37,200 square metres (400,000 square feet) of lettable office space, which could add an estimated €12 million to the Company's annual rent.

 

Our development programme continues at a good pace at Horizon Logistics Park, which is beside Dublin Airport and considered the prime logistics location in Ireland, where our landholding comprises approximately 310 acres. Our strategy to develop a logistics park of international quality and scale through a moderate level of speculative development is progressing, while at the same time competing for larger purpose-built units. The new 10,700 square metre (115,000 square foot) unit for Bunzl, where construction commenced in February 2019, is a case in point.

 

Firm focus on driving income quality and security

We continue to grow the Company's contracted rent, focusing on the quality and security of our income, with a strong WAULT of 8.7 years at 31 December 2018, and with 97% occupancy, all of which supports our progressive dividend strategy and the value of the Company's properties.

 

We saw a strong rental performance in the six month period, where despite the sale of Westend Retail Park in June 2018, which had a contracted annual rent of €8.5 million, rental income of €34.4 million was 2.1% ahead of the same period in 2017 (€33.7 million). The loss of this retail rental income from Westend was more than offset by the new high quality and more secure rent generated at our office and logistics development schemes, and from uplifts in rental income achieved through rent reviews.

 

Dividends

The Board declared a dividend on 18 September 2018, in respect of the year to 30 June 2018, of 2.7 cent per share, or €18.7 million, which was paid on 19 October 2018, bringing the total dividends paid for that year to 5.3 cent per share, or 100% of EPRA Earnings. The Board intends to declare a dividend of 2.8 cent per share for the six months to 31 December 2018, equating to 84% of EPRA Earnings for the period. Our guidance of a dividend of 4% per annum on net asset value post the completion and letting of our current development programme remains unchanged.

 

Ireland - continued economic growth amid Brexit uncertainty

Amid the geopolitical uncertainty that prevails, the Irish economy continues to grow at a pace well ahead of the Eurozone average. Core domestic demand growth of 4.8% is estimated for 2018, up from 2.6% in 2017, with a forecast for 4.5% growth in 2019 and 3.7% in 2020 (source: Goodbody). These estimates assume an orderly Brexit, however, which is far from being a certain outcome at this point.

 

The labour market, a key driver of Irish economic growth, continues to strengthen, with employment growth estimated at 3.1% for 2018. There are now more people employed in Ireland than at any other time, with the unemployment rate at 5.3%, down from 6.4% in January 2018, and with an increase in net inward migration supporting labour market demand. FDI job creation remains strong, particularly among US technology companies in Dublin, attracted to Ireland by its EU market access, stable corporate tax environment and its attractiveness as a workplace for overseas talent.

 

Eurozone interest rates remain low and are expected to do so for some time, with the Irish government

10 year bond rate currently at below 90 basis points, a level which remains supportive of Irish commercial property yields and values. 

 

Moderate gearing, robust balance sheet

Having reduced our loan-to-value ('LTV') level to 15.5% at 30 June 2018 through the sale of Westend Retail Park in June 2018, borrowings increased by €38.3 million in the six months to 31 December 2018 as we continued to debt finance the Company's capital expenditure on our developments and our standing assets. Our LTV at 31 December 2018 is still modest at 17.5%, with €101 million of undrawn facilities for investment in our developments in progress and for future development at Central Park and Horizon Logistics Park.

 

In September 2018 we put in place a new revolving credit facility, which matures in September 2022 and which includes an option to extend by a further year. This low cost and flexible financing is being used to fund our development costs in the offices and logistics sectors, our two key areas of focus.    

 

Our intended gearing level at this point in the cycle continues to be 25%, post the completion and letting of our development assets, but as previously stated we remain opportunistic in our approach, which could lead to higher or lower gearing levels depending upon market conditions and investment opportunities.

 

Outlook

Our focus remains on delivering attractive risk-adjusted returns to shareholders, with moderate levels of gearing and disciplined speculative property development. We remain committed to our progressive dividend policy, underpinned by our high quality and well-located portfolio, with secure income from leases to the highest calibre tenants.

 

The occupier market in our key sectors of offices and logistics remains strong, and we continue to operate in a stable capital markets environment which is attracting increasing levels of core international capital, attracted by the relative stability of lease structures and income, the quality of commercial real estate and prospects for growth.

 

We report these results at a time of heightened geopolitical uncertainty globally. While we have seen some positive impacts from Brexit on the Dublin office market, and within our property portfolio, the ultimate outcome of Brexit may potentially be a headwind for the Irish economy. We remain alert to this possibility, but despite this uncertainty we look forward to the period ahead with cautious optimism and believe that the Company continues to be well positioned to take advantage of further opportunities and to deliver attractive risk-adjusted returns to its shareholders.  

 

Gary Kennedy

Chairman

26 February 2019

 

BUSINESS REVIEW

1.   PORTFOLIO SUMMARY (see Appendix 1 for further analysis)

§ €74.4 million annual contracted rent (€71.7 million at 30 June 2018)

§ 3.5% EPRA vacancy rate (30 June 2018: 4.4%)

§ 8.7 years WAULT across the portfolio (8.8 years at 30 June 2018)

§ Dublin focus (95% by portfolio value), with our prime office building in Cork city our only non-Dublin asset

§ Portfolio dominated by high grade office assets in Dublin's core CBD and South Dublin

§ Value by sector: 88% offices, 7% logistics, 4% mixed use and <1% retail

§ Portfolio is 3% reversionary at 31 December 2018

§ Diversified tenant base: 25% banking, 23% other financial services, 20% TMT, 6% logistics, 6% flexible offices, 5% retail trade, 5% government and 4% professional services

§ Top 10 tenants account for 54% of contracted rent, with our largest tenant (AIB) accounting for 13% of the total

§ Yields:

 

 

On 31 December 2018 Values

On 30 June 2018 Values

Investment Initial Yield¹

4.8%

4.9%

Portfolio Initial Yield¹

4.6%

4.6%

¹ Calculated as contracted rent at 31 December 2018/30 June 2018 over the 31 December 2018/30 June 2018 valuation plus notional purchaser's costs

 

2.   PORTFOLIO VALUATION

§ Portfolio value €1.48 billion at 31 December 2018 (30 June 2018: €1.42 billion), an increase of 4.1% in the value of assets held throughout the six months to that date, gross of capital expenditure

§ Revaluations of €25.4 million for the six months (2017: €31.3 million), comprising €17.7 million from investment properties and €7.7 million from developments (2017: €0.4 million from investments and €30.9 million from developments)

§ Revaluations are net of capital expenditure in the six month period of €33.0 million (2017: €39.8 million), of which €29.9 million (2017: €35.1 million) was incurred on developments and €3.1 million (2017: €4.7 million) on standing assets

§ No disposals in the six months to 31 December 2018

§ Acquisition of five acres of land for €0.4 million at Horizon Logistics Park, with a further four acres acquired since 31 December 2018

 

An analysis of the movement in portfolio valuation in the six months to 31 December 2018 is as follows:

 

Investment properties and lands

Developments in progress

Total

 

€m

€m

€m

Portfolio value at 30 June 2018

1,409.5

14.9

1,424.4

Capital expenditure

3.1

29.9

33.0

Lands acquired

0.4

-

0.4

Reclassifications

49.1

(49.1)

-                  

Property value uplifts

17.7

7.7

25.4

Portfolio value at 31 December 2018

1,479.8

3.4

1,483.2

 

The main individual valuation movements in the six months to 31 December 2018 were:

 

§ One Molesworth Street, Dublin 2 (prime city centre office): Gross increase in value by €8.7 million/7.9% on 30 June 2018 valuation, to €119.2 million, or €3.8 million/3.4% net of capital expenditure of €5 million in the six month period. The uplift in value in the period reflects the letting to Banking Payments Federation Ireland completed in September 2018, rent free periods reducing and a slight reduction in equivalent yield by 2 basis points, from 4.10% to 4.08%, between June and December 2018;

§ 5 Harcourt Road, Dublin 2 (prime city centre office): Gross increase in value by €4.4 million/8.1% on 30 June 2018 valuation, to €58.6 million, or €3.1 million/5.6% net of capital expenditure of €1.3 million in the six month period. The uplift in value in the period reflects a reduction in the equivalent yield by 10 basis points, from 4.25% to 4.15%, between June and December 2018, driven by comparable evidence;

§ Fitzwilliam Hall, Dublin 2 (city centre serviced office): Valuation increased by €2.7 million/11.3% in the six months to 31 December 2018, to €26.9 million, as a result of the settlement of a rent review during the period at a rent which is 7% higher than the valuer's ERV, and 91% higher than the previous passing rent. The crystallisation of this significant reversion brought about a reduction in the equivalent yield from 5% to 4.8%;    

§ Central Park, Dublin 18 (prime suburban offices): the total value of the Central Park estate increased by €17.9 million/4% on the 30 June 2018 valuation, from €442.2 million to €460.1 million. Net of capital expenditure in the period of €14.3 million, the increase in the total value of the estate was €3.6 million/1.0%, reflecting relatively stable rental values and yields. With regard to Building I, which is due to complete in Q1 2019, its value increased by €18 million, from €15 million at 30 June 2018 to €33 million at 31 December 2018, gross of capital expenditure in the period of €10 million, or by €8 million net of this capital expenditure;

§ George's Quay Estate, Dublin 2 (prime city centre office): the valuation of the Company's largest single holding in Dublin city centre increased by €6.7 million/1.8% from €361.3 million at 30 June 2018 to €368 million at 31 December 2018, with rental values stable and a minor reduction in equivalent yields in the six month period. Net of capital expenditure of €1.9 million in the period, mainly on fit-out, the increase in valuation was 1.3%;  

§ Horizon Logistics Park (prime logistics at Dublin Airport): total value increased by €13.6 million/15.2% gross of capital expenditure in the period, from €90 million to €103.6 million. Net of capital expenditure in the period of €10.7 million, including €0.4 million for land acquisition, the increase in value between 30 June 2018 and 31 December 2018 was €3.0 million, or 3.3%;

§ One Albert Quay, Cork (prime city centre office): €4.5 million/5.8% valuation increase in the six months to 31 December 2018, from €76.8 million to €81.3 million, due mainly to yield compression. The equivalent yield reduced by 25 basis points from 5.75% to 5.50% between valuation dates, based on recent comparative evidence. In addition, almost all of the rent free periods granted to tenants have now expired.

PORTFOLIO VALUATION ANALYSIS

 

 

December 2017 Valuation

Movement December 2017 to June 2018

June 2018 Valuation

Movement June to December 2018

December 2018 Valuation

 

Annual Movement to December 2018

 

€m

 

€m

 

€m 

 

 

Offices

 

 

 

 

 

 

 

Dublin City Centre

681.0

10.4%

751.7

3.0%

774.5

 

13.7%

Dublin Suburbs

420.3

5.2%

442.2

4.0%

460.1

 

9.5%

Cork

73.1

5.1%

76.8

5.8%

81.3

 

11.2%

Total Offices

1,174.4

8.2%

1,270.7

3.6%

1,315.9

 

12.0%

Mixed Use

57.4

0.8%

57.7

0.1%

57.8

 

0.7%

Logistics

61.4

46.5%

90.0

15.2%

103.6

 

68.7%

Retail

5.9

0.5%

6.0

(0.2%)

5.9

 

0.3%

Total - Assets Held Throughout the Period

1,299.1

9.6%

1,424.4

4.1%

1,483.2

 

14.2%

Disposals in the Period:

 

 

 

 

 

 

 

Westend Retail Park

147.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Statement of Financial Position

1,446.2

 

1,424.4

 

1,483.2

 

 

 

 

 

 

 

 

 

 

 

Note: the % movements above do not reflect capital expenditure incurred in the respective accounting periods. Capital expenditure in the six month period to 31 December 2018 is set out in Note 9.

3.   ASSET MANAGEMENT

 

3.1       New Lettings

 

In the six months to 31 December 2018, the Company entered into new leases and licences with total new contracted rent of €2.9 million per annum, across a total of 12,900 square metres (139,100 square feet) of lettable space, as summarised below:

 

Property

Tenant

Lettable area

 

Rent

Total annual rent

Lease term

 

Lease break year

Rent free months

 

 

Sq Ft

 

€ psf

€'000

Years

 

 

Horizon Logistics Park, Dublin Airport

Bunzl Ireland Ltd

115,000

 

€9.95

1,144

20

12

6

George's Court, Dublin 2

Huawei Ireland Ltd

16,332

 

€54

922

15

10

4

One Molesworth Street, Dublin 2

Banking Payments Federation Ireland

7,809

 

€65

520

25

-

12

Others

 

 

 

 

350

 

 

 

Total

 

139,141

 

 

2,936

 

 

 

 

Details of the principal new lettings in the six months to 31 December 2018 are as follows:

 

I.    Horizon Logistics Park - Bunzl Ireland Limited - €1.14 million contracted annual rent (when built)

In September 2018 we signed an agreement with Bunzl Ireland Limited (part of the Bunzl plc group), subject to planning permission, to construct a unit of 10,700 square metres (115,000 square feet) for them. This will add €1.14 million to the Company's annual rent when completed in the first quarter of 2020. Planning permission was subsequently obtained and construction commenced in mid-February 2019.

 

II.  George's Court, Dublin 2 - Huawei - €0.92 million contracted annual rent

In September 2018 we signed a new lease with Huawei Ireland Limited for the fourth floor at George's Court in Dublin 2, comprising 1,520 square metres (16,332 square feet) on a 15 year lease with a break in year 10. The annual rent is €0.92 million, with a rent free period of four months to December 2018.

 

III. One Molesworth Street, Dublin 2 - Banking Payments Federation Ireland - €0.52 million contracted annual rent

In September 2018, the Company signed an agreement with Banking Payments Federation Ireland to lease the balance of the third floor, comprising 725 square metres (7,809 square feet), on a 25 year lease with no break options. The annual rent is €0.52 million, with a rent-free period of 12 months from September 2018. This letting brought the office element of the building to full occupancy.

 

3.2       Rent reviews

During the six months to 31 December 2018, we completed four rent reviews, delivering a 37% uplift of 37% (€0.8 million) to annual rent. The new rents achieved overall were 9.5% ahead of ERV at 30 June 2018. The rent reviews related to 8,630 square metres (92,900 square feet) of lettable space, of which 4,500 square metres (48,300 square feet) is city centre office space and 4,140 square metres (44,600 square feet) is a logistics unit at Horizon Logistics Park.

 

3.3       Acquisitions - additional lands at Horizon Logistics Park, Dublin Airport

In September 2018 the Company acquired a further 5 acres of land adjacent to its existing holding at Horizon Logistics Park at Dublin Airport, for a contract price of €385,000. Subsequent to the financial period end the Company acquired an additional 4 acres for a contract price of €325,000.

 

The acquisition brought the Company's total land holding at Horizon Logistics Park to approximately 310 acres, of which an estimated 263 acres is capable of development.

 

4.   DEVELOPMENT PROJECTS

 

A summary of the Company's development schemes completed in the period and currently on site is as follows:

 

Property

Use

Lettable Area (Sq Ft)

Delivery

Capex to Complete (€m)

Completed in the Period

 

 

 

 

Unit D3, Horizon Logistics Park

Logistics

47,750

Q3 2018

0.4

 

 

 

 

 

On Site at 31 December 2018

 

 

 

 

Building I, Central Park

Office

101,000

Q1 2019

10.9

Units D6, Horizon Logistics Park

Logistics

24,000

Q2 2019

1.5

Units D7, Horizon Logistics Park

Logistics

34,000

Q2 2019

2.3

Total - On Site at 31 December 2018

 

159,000

 

14.7

Buildings completed in Prior Periods

 

 

 

16.1

TOTAL

 

 

 

31.2

 

Horizon Logistics Park, Dublin Airport

We completed a purpose-built unit for a luxury goods retailer in September 2018, which added €1.45 million to our contracted rent. Encouraged by the strength in occupier demand that we are seeing for high quality modern logistics units, we commenced the construction of two further speculative units in August 2018, totalling 5,400 square metres (58,000 square feet) of lettable space, which are due for completion in the second quarter of 2019.  

 

The pre-letting to Bunzl, described above, and the future letting of the two additional speculative units under construction, will increase the annual rent at Horizon Logistics Park to an estimated €6.3 million.

The letting momentum at Horizon Logistics Park reflects the confidence of high calibre tenants in the park and its superior location, as well as the outlook for the logistics sector in Ireland. It also bodes well for our overall strategy of organically growing value and income through the supply of modern, high quality units at what will be Ireland's premier logistics park.  

 

 

5.   FINANCIAL REVIEW

 

Alternative performance measures

Various alternative performance measures, principally the best practice measures as defined by EPRA, are included in these interim results. They are included as, like other listed property companies, we believe that they are useful to readers of financial statements of real estate companies. Alongside the measures are, where applicable, their definition, calculations and an explanation of their relevance.

 

Total profit of €45.6 million for the period (2017: €53.0 million)

Total profit for the six months to 31 December 2018 was €45.6 million (December 2017: €53.0 million), and comprised EPRA Earnings (or net rental profit) of €21.7 million (2017: €22.1 million) and fair value movements of €23.9 million (2017: €30.9 million).    

 

On a per-share basis, the basic EPS for the period was 6.5 cent (2017: 7.7 cent), with EPRA EPS of 3.1 cent (2017: 3.2 cent).

 

Looking at EPRA Earnings, which at €21.7 million were €0.4 million/1.8% lower, period-on-period, rental income was marginally ahead by €0.7 million, while operating and finance costs were €1.1 million higher, period-on-period.

 

The €0.7 million increase in rental income over the same period in the prior year was despite the sale in June 2018 of Westend Retail Park, which contributed €4.3 million to rent in the six months to 31 December 2017 and nothing in the current period following its disposal. The loss of this rental income was largely offset by contributions of €3.7 million to rental income from developments completed in the financial year ended 30 June 2018, and €0.4 million from Unit D3 in Horizon Logistics Park, which was completed in the period to 31 December 2018. In addition, the positive contribution from rent review settlements (€1.5 million, including back rent) and from the acquisition of the minority interest in Mount Street (€0.4 million) outweighed the net impact of vacant space at the George's Quay Estate (€0.7 million).

 

A summary of the drivers of rental income between the two periods is as follows:

 

€'000

Gross Rent - 6 months to 31 December 2017

33,682

Disposals in FY 2018 - income effect

(4,550)

Impact of vacancy at George's Quay Estate

(741)

Developments Completed in FY 18 - new income

3,670

Developments Completed in FY 19 - new income

397

Rent reviews settled - additional income

1,524

Acquisitions in FY 2018 - income effect

349

Other

69

Gross Rent - 6 months to 31 December 2018

34,400

 

Gross and net rental income is analysed as follows (excluding service charge income and expenditure):

 

 6 months to 31 December

2018

2017

 

€'000

€'000

Billed Rental Income

32,863

27,186

Spreading of Lease Incentives

1,537

6,496

Gross rental and related income

34,400

33,682

Property Operating Expenses

(1,554)

(1,306)

Net rental income

32,846

32,376

 

 

 

 

Cost analysis:

Total costs were €1.1 million higher than in the same period in 2017, summarised as follows:

 

§ Property outgoings: Property outgoings of €1.55 million were €0.24 million/19% higher than the same period in 2017 (€1.31 million), due mainly to an increase in vacancy-related costs at George's Quay House and George's Court office buildings in Dublin city centre, and vacancy-related costs at One Molesworth Street as the building was being leased up. These cost increases were offset by savings on running costs of the apartments at Arena Centre which were sold in October 2017, and Westend Retail Park, sold in June 2018. 

§ Administrative expenses: Administrative expenses of €1.1 million were in line with the same period in the prior year, which were also €1.1 million.

§ Investment Manager fees: The base fee charged in the period was €6.3 million (2017: €5.8 million), with the increase in the fee reflecting the increased EPRA NAV of the Company on which the base fee is calculated. The base fee is calculated and paid calendar quarterly in cash on EPRA NAV at quarter end, on the basis of 1% per annum of EPRA NAV. No provision for a performance fee has been made at 31 December 2018, as the directors do not believe that a performance fee will be payable for the financial year ending 30 June 2019.

§ Finance costs: Finance costs of €3.7 million for the period were €0.4 million higher than the same period in 2017, with loan interest cost lower by €0.3 million, due largely to the application of the Westend Retail Park sale proceeds to reduce the RCF balance, while financing costs were €0.5 million higher due to a new RCF put in place in September 2018, with unamortised costs on the previous RCF being written off, and a higher level of commitment fees due to the reduced RCF balance following the sale of Westend Retail Park. The Company's interest rate swaps on €200 million of its debt came into force in October 2018, with swap interest costs of €0.2 million in the six months to 31 December 2018 (2017: nil).

 

A reconciliation of IFRS earnings and EPS to EPRA Earnings and EPRA EPS is as follows:

 

 

December 2018

December 2018

December 2017

December 2017

 

€'000

Cent per share

€'000

Cent per share

Earnings per IFRS income statement

45,616

6.5

53,045

7.7

EPRA adjustment - fair value movement on properties

(25,358)

(3.6)

(31,288)

(4.5)

EPRA adjustment - fair value movement on financial instruments

1,440

0.2

352

0.0

EPRA Earnings

21,698

3.1

22,109

3.2

 

2.1% growth in IFRS NAV to €1.28 billion

 

The Company's IFRS NAV grew by 2.1% in the six month period, from €1,251.6 million to €1,278.5 million, or from 180.3 cent per share to 182.8 cent per share. EPRA NAV per share grew by 2.3% in the period, from 178.9 cent to 182.9 cent. This growth is net of dividends paid in October 2018 of €18.7 million, or 2.7 cent per share, in respect of the six months to 30 June 2018. The growth in EPRA NAV in the six months to 31 December 2018, excluding these dividends paid, was 3.7%.    

 

The main drivers of the growth in IFRS NAV in the six months to 31 December 2018 are analysed as follows, with a reconciliation of IFRS Net Assets to EPRA Net Assets:

 

 

€m

IFRS Net Assets at 30 June 2018

1,251.6

Investment properties revaluation

25.4

Swap revaluations

(1.5)

Net rental profit

21.7

Dividends paid

(18.7)

IFRS Net Assets at 31 December 2018

1,278.5

Addback: Interest rate swap liability

1.0

EPRA Net Assets at 31 December 2018

1,279.5

 

Please see Appendix 2 for further EPRA Performance Measures.

 

Total return of 12.6% for the year to 31 December 2018

The total return to shareholders in the year to 31 December 2018, measured as the increase in EPRA NAV plus dividends paid in the period, was 12.6%, comprising 9.5% from EPRA NAV increase plus 3.1% from dividends paid. 

 

Gearing and debt structure

A summary profile of the Company's debt at 31 December is as follows:

 

 

Balance at 31.12.2018

Interest Cost

Annual Interest

Property LTV

Base Maturity

Years

 

€m

% per annum

€m

%

 

 

Central Park facility

150.0

2.0%

3.0

32.6%

Jun-21

2.5

Revolving credit facility

109.2

1.8%

2.0

10.7%

Sep-22

3.7

Total

259.2

1.9%

5.0

17.5%

 

3.0

 

In the event that the Company was to exercise the extension options within its facility agreements the extended maturity would be as follows:

 

 

Extended Maturity

Years

Central Park facility

Jun-23

4.5

Revolving credit facility

Sep-23

4.7

Total

 

4.6

 

The corresponding debt profile at 30 June 2018 was as follows:

 

 

Balance at 30.06.2018

Interest Cost

Annual Interest

Property LTV

Maturity

Years

 

€m

% per annum

€m

%

 

 

Central Park facility

150.0

2.0%

3.0

33.9%

Jun-21

3.0

Revolving credit facility

70.9

1.7%

1.2

7.2%

Dec-18

0.4

Total

220.9

1.9%

4.2

15.5%

 

2.2

 

The Company's gearing level remains low, with property LTV of 17.5% at 31 December 2018 (30 June 2018: 15.5%). During the six months to 31 December 2018 we drew down €38.3 million on the revolving credit facility to fund our development schemes and portfolio maintenance capital expenditure. The flexibility and low borrowing cost afforded by the RCF make it an attractive form of financing for the Company.

 

New revolving credit facility in place

In September 2018 we put a new RCF in place with Barclays Bank Ireland and with Wells Fargo, with the following key terms:

 

§ Limit of €210 million, with optionality to increase to €290 million;

§ Term of four years from September 2018 to September 2022, with the option to extend by a further year to September 2023;

§ Margin of 1.7% per annum when LTV is less than 10%, and 1.8% per annum when LTV exceeds 10%;

§ Commitment fee of 40% of applicable margin; and

§ Barclays and Wells Fargo to participate 50:50.

 

The other facility that the Company has is with Bank of Ireland and is secured on the Central Park assets. The facility is fully drawn at €150 million and matures in June 2021, with extendibility to June 2023.

 

The Company has hedging in place in the form of forward-starting interest rate swaps covering the period from October 2018 to October 2022, at a blended fixed rate of 0.074% per annum on €200 million. These swaps give the Company certainty around its maximum interest cost on €200 million of its debt for the period October 2018 to October 2022. 

 

OUR MARKET 

Economic Overview

 

Core domestic demand is expected to have been in the order of 6% for 2018 when actuals are finalised (2017: 2.9%). Forecast growth in domestic demand for 2019 is 4.5%, suggesting another strong year for the Irish economy. To put this in context, the IMF are forecasting global growth for 2019 of 3.5% and 3.6% in 2020. The main drivers of growth in Ireland in 2018 were consumer spending, business investment and construction. 

 

The total number of people employed in Ireland reached an all-time high in Q3 of 2018 of 2.3 million people. The unemployment rate as at January 2019 was 5.7%, down from 6.4% at the end of 2017, and it continues to trend downwards towards full employment (estimated to be 4.5%). The rate of employment growth for 2018 is estimated at 2.3%, and is forecast to be 2.5% for 2019.

 

2018 was another strong year for Foreign Direct Investment ('FDI') into Ireland and for job growth in FDI businesses. IDA Ireland, the state agency responsible for attracting FDI to Ireland, announced the creation of 14,040 net new FDI jobs in 2018, its best year since 2000. There are now 230,000 people, or 10% of the total workforce, employed in FDI-related businesses. Companies from USA account for approximately three quarters of this employment.

 

Consumer price inflation remains muted at 0.5% for 2018, although it is set to rise to 0.9% in 2019.  Looking ahead, given the forecast for employment growth of 2.5% in 2019 and for wage inflation of 3%, the outlook for consumer spending continues to be positive.

 

Tourism figures in 2018 were up 6.9% on 2017 and reached a record 10.6 million visitors, a positive for the retail, hotel and food and beverage sectors. Interestingly, 35.4% of all visitors came from the UK, despite Brexit uncertainty and weaker sterling, 35.9% came from Europe (excluding the UK), 22% from the US, 6.2% from Asia Pacific and 0.5% from other areas.

 

Ireland recorded a trade surplus of €4.8 billion in November 2018, up from €3.6 billion in the same month in 2017. Considering the January to November 2018 period, the trade surplus widened to €47.3 billion, from EUR 40.4 billion in the same period in 2017, as exports grew 14% to €128.5 billion and imports rose 12.3% to €81.2 billion.

 

It is anticipated that there will be close to a balanced budget in Ireland in 2018 and 2019. Given this improvement, it is expected that the Government's capital spending plan will increase by 30% in 2019, following a 24% increase in 2018.  Government debt to GDP continues to contract, standing at an estimated 63% at the end of 2018, below the Eurozone average of 98%.

 

New housing completions in Ireland reached an estimated 18,800 units in 2018, an increase of 30% on 2017 levels, and are forecast to increase to 22,000 units in 2019. This is still well behind current demand levels and problems remain to be resolved around viability, breadth of activity and affordability.

 

The most recent Tender Price Index (SCSI) shows that construction tender prices continue to rise steadily. The first half of 2018 saw an increase of 4% and the forecast for the second half would suggest that full year inflation will be in the order of 7.4%.

 

The impact that Brexit is likely to have on the Irish economy is still very uncertain, and will remain as such until we know whether we will see a 'hard Brexit', with no deal, or a 'softer Brexit', involving a deal between the EU and the UK, and until we understand the potential impact of the final outcome. The forecasts for the economy outlined above are predicated upon Brexit not having an adverse bearing on the Irish economy in 2019. 

 

Capital Markets

 

The total investment spend in Ireland in 2018 was €3.8 billion, up 46% on the same period in 2017 (€2.6 billion). One of the notable reasons for the strong increase in transactional activity was an increase in transactions in the Private Rental Sector ('PRS'). In 2017, PRS comprised 12% of total investment, which increased to 30% in 2018. Demand for the office sector remained strong, and office transactions accounted for 41% of total investment. Investment into retail, however, saw a sharp reduction in demand, down from 31% of the total invested in 2017 to 14% in 2018. While demand for logistics remains strong, it is still a small component of total investment, at 3.3%.

 

Sources of capital continue to diversify geographically, with the emergence of Asian capital in the market in 2018. That said, international buyers are predominantly focused on prime assets and locations, resulting in a divergence in demand and pricing between prime and secondary real estate. A geographical analysis of investors in the Irish market in 2018 is as follows:

 

Source

% of total invested in 2018

Ireland

35%

USA

14%

Germany

11%

UK

7%

South Korea

5%

Hong Kong

5%

Other

9%

Undisclosed/unknown

14%

 

One of the other notable characteristics of the market in 2018 was the number of large transactions. Over the year there were 21 deals greater than €50 million, and of these, 11 transactions were over €100 million. This compares with 3 deals over €100 million in 2017. The top ten investment transactions for 2018, representing 37% of total investment, were as follows:

 

 Top 10 investment transactions in 2018:

 

Property

Sector

Price (€m)

Purchaser

Origin

Heuston South Quarter, Dublin 8

Office

175

Hutchinson

Hong Kong

Dublin Landings, Dublin 1

Office

165

Triuva

Germany

Swap of 40 Molesworth Street & Deloitte Hatch Street.

Office

160

IPUT/New Ireland

Ireland

Chatham & King St, Dublin 2

Mixed use

155

Hines

US

Westend Retail Park, Dublin 15

Retail

148

DWS Deutsche Asset Wealth

Germany

Clongriffin, Dublin 13

PRS

140

Tristan Capital

UK

Fernbank, Churchtown, Dublin 14

PRS

139

Irish Life

Ireland

The Grange, Stillorgan, Co. Dublin

PRS

126

Kennedy Wilson

US

The Beckett Building, East Road, Dublin 3

Office

107

KanAm

South Korea

6 Hanover Quay, Dublin 2

Office

101

Carysford Capital

Ireland

Total

 

1,416

 

 

 

Prime Equivalent Yield - some yield compression evident

 

Sector

Yield

Trending

 

Office - Prime CBD Dublin

4.00%

Stronger

Offices - Prime Dublin South Suburbs

5.00%

Stable

Offices - Prime CBD Cork

5.50%

Stronger

Prime Dublin Logistics

5.10%

Stronger

Retail - Prime Dublin High Street

3.25%

Weaker

Retail - Prime Retail Warehouse

5.00%

Stable

 (Source: CBRE, February 2019)

 

At the start of 2018 we saw yields for prime offices move in to 4%, and as the year progressed, transactional evidence resulted in yields contracting for prime Dublin South Suburbs, prime CBD Cork and for prime Dublin logistics. Yields for offices in CBD Dublin and Cork, as well as prime Dublin logistics, are trending stronger, indicating solid demand from multiple capital sources. The retail sector has seen some slippage, however, with the high street and the sector generally trending weaker.

 

Property Returns - strong total returns at 9.1%for Ireland in 2018

 

The MSCI index recorded total returns for the year to December 2018 for Ireland at 9.1% across all property sectors (2017: 6.4%). Income accounted for 4.8% of the return and Capital Growth for 4.1%. Of the traditional sectors, Industrial/Logistics was the outperformer with a total return of 12.4% followed by offices 9.3% and retail at 6.7%. 

 

Occupier Markets

 

The office leasing market had another record year of tenant demand. Gross take-up in 2018 in Dublin offices reached 363,060 square metres (3.9 million square feet). This is up 9.6% on 2017 levels (330,000 square metres/3.56 million square feet) and compares to a 10-year average of 185,800 square metres (2 million square feet).

 

The top 10 Dublin office lettings in 2018 were as follows:

 

Tenant

Building

Location

Square Metres (000)

Square Feet (000)

% of Total 2018 Gross Take-up

Facebook

AIB Bank Centre

Dublin 4

81

870

22.3%

Google

Bolands Quay, Barrow Street

Dublin 4

22

239

6.2%

LinkedIn Europe

One Wilton Terrace

Dublin 2

14

154

3.9%

WeWork

Charlemont Exchange, Block D

Dublin2

11

120

3.1%

Hubspot

1 Sir John Rogerson's Quay

Dublin2

11

116

3.1%

IDA

3 Park Place, Hatch Street

Dublin 2

11

115

3.1%

WeWork

No.2 Dublin Landings

Dublin 1

10

104

2.6%

WeWork

One Central Plaza, Dame Street

Dublin 2

7

74

1.8%

Google

1 Grand Canal Quay Grand Canal Dock

Dublin 2

5

58

1.6%

WeWork

5 Harcourt Road

Dublin 2

5

50

1.3%

Top 10 Deals

 

 

177

1,900

49%

 

The technology sector continues to dominate the letting market in Dublin, accounting for six of the top ten lettings above, and 51% of total gross take-up in Dublin for 2018 (36.5% in 2017).

 

Take-up by sector for Greater Dublin for 2018 was as follows:

 

Sector

% of Gross Take-up

Technology

51%

Business Services

18%

Financial

10%

Public Sector

8%

Manufacturing and Energy

7%

Consumer Services & Leisure

3%

Professional

2%

Other

1%

Total

100%

 

Take-up in the Dublin South Suburbs reached 67,120 square metres (722,472 square feet) in 2018, accounting for 18% of the total leasing activity in Greater Dublin.

 

Take-up by sector in the Dublin South Suburbs in 2018 was as follows:

 

Sector

% of Gross Take-up

Technology

38%

Manufacturing and Energy

17%

Business Services

15%

Public Sector

14%

Financial

12%

Other

2%

Consumer Services and Leisure

1%

Professional

1%

Total

100%

 

As we commence 2019, tenant demand remains strong with 139,300 square metres (1.5 million square feet) of lettings currently in legal due diligence and a further 323,300 square metres (3.5 million square feet) of current demand.

 

The vacancy rate for Greater Dublin remains unchanged at 6.1% when compared with June 2018. The Dublin 2/4 vacancy rate is 6.3% and the Grade A vacancy rate in Dublin 2/4 is 7.2% (December 2017: 5.4%). In Dublin South Suburbs the overall vacancy rate is 5.6% (December 2017: 6.7%) and the Grade A vacancy rate is currently 4.6% (December 2017: 6.7%).

 

Finally, prime Dublin office rents remain stable at €700 per square metre (€65 per square foot). In Dublin South Suburbs, prime office rents currently stand at €306 per square metre (€28.50 per square foot).

 

There is currently 424,000 square metres (4.6 million square feet) by gross development area of office space under construction in Dublin city centre across 35 schemes, up marginally from 406,200 square metres (4.4 million square feet) in February 2018. In 2019, 145,000 square metres (1.6 million square feet) is due for completion, approximately 64% of which is already let. In addition, 213,600 square meters (2.3 million square feet) of new office development delivered in 2018.

 

There is currently 87,700 square metres (944,000 square feet) of new offices under construction in eight projects in the suburbs, 39% of which has been pre-let.

 

 Cork Office Market

 

The Cork office market was very active during 2018, recording an estimated 39,950 square metres (430,000 square feet) of total take-up, more than double the 19,045 square metres (205,000 square feet) in 2017.

 

The vacancy rate in Cork at the end of Q3 2018 stood at 9.8% (Feb 2018: 10.5%). There is no current standing vacant office accommodation that would be classed as Grade A in the city centre, so the vacancy rate comprises mostly older buildings. There is, however, new Grade A office development under construction, with occupiers looking for modern space having no option but to take mid-development lettings in order to secure modern accommodation.

 

While there is currently 278,000 square metres (3 million square feet) of pipeline office development in Cork, schemes that have actually commenced on site extend to 32,950 square metres (354,670 square feet). 81% of the office developments are located in the city centre and include Block A Navigation Square (11,600 square meters/125,000 square feet) and 85 South Mall (4,300 square meters/46,000 square feet), both of which are scheduled to reach practical completion in early 2019.

 

Prime headline rents in Cork city centre are €350 per square metre (€32.50 per square foot), up from €323 per square metre (€30 per square foot) at the start of 2018. Recent lettings include:

 

·     85 South Mall - letting to Forcepoint International Technology Ltd at €350 per square metre (€32.50 per square foot).

·     85 South Mall - letting to KPMG at €323 per square metre (€30 per square foot).

·     Navigation Square, Block A - letting to Clearstream at €350 per square metre (€32.50 per square foot).

 

The remainder of Block A and Block B in Navigation Square are expected to seek a rent in the order of €377 per square metre (€35 per square foot). In addition, it is anticipated that tenant incentives will start to reduce. Currently the standard is 15 to 18 months' rent free, which is expected to reduce to 12 to 15 months.

 

Logistics/Industrial Sector

 

Across Ireland, take-up in the Logistics/Industrial sector in 2018 was up 22% on 2017, and reached 304,530 square metres (3.3 million square feet). Lettings comprised 69% of total take-up, with sales of units to owner- occupiers comprising the balance. In total there were 178 deals in the year, of which 114 were lettings and 64 were sales.

 

There is currently tenant demand for 31,000 square metres (333,700 square feet) at this point in the year.

 

Vacancy rates in the top 25 modern logistics/industrial estates currently stands at 8%, with 8 out of the 25 estates having no vacancy.

 

Rents for prime logistics units in Dublin have remained steady at €106 per square metre (€9.85 per square foot), with some research houses suggesting up to 6.5% rental growth in 2019.

 

There continues to be good demand from investors for modern logistics units, however the sector still comprises only 3% of the total investment market. Over the last six months there has been yield compression in this sector, with prime yields currently at 5.1% and trending stronger.

 

It is anticipated that demand for modern logistics units will continue to grow as a result of the increase in e-commerce in Ireland, the strength of the pharmaceutical industry and overall economic growth. Brexit may also present further opportunities, as would the development of e-commerce order fulfilment facilities, of which there are none on the island of Ireland.

 

Sources:

1.   CBRE research reports and research department

2.   JLL research reports

3.   Central Statistics Office website

4.   IDA website

5.   Investec research

6.   Goodbody research

7.   Central Bank of Ireland

8.   Trading Economics

PRINCIPAL RISKS AND UNCERTAINTIES

The Board takes the view that adequately identifying and managing the risks to achieving our strategic objectives is key to the successful delivery of shareholder returns. The Board has divided the principal risks into External Risks, over which we have no influence, and Internal Risks, which we can influence, and which are set out below.   

External risks

Risks

Potential impact

Mitigation measures

Direction of risk

Cyclical Market - the property market is cyclical and as such values and market conditions can be volatile.

Potential adverse impact on property values and rental levels, impacting on shareholder returns.

95% concentration of our assets in Dublin, the capital city, which experiences less volatility in a downturn than regional centres in Ireland. Our only non-Dublin asset is in Cork, Ireland's second city by population size.

 

Our assets are predominantly in prime locations, which are more resilient in a downturn.

 

83% of our portfolio by value is Dublin offices, which proved to be the most resilient asset class in the last downturn.

 

Our retail assets now comprise less than 1% of our portfolio value, following disposals of retail assets over the last 3 years.

 

Our logistics holding is located in close proximity to airport and motorway infrastructure.

 

Our vacancy rate across our income producing properties by ERV is low at 3.5%, thereby reducing the leasing risk in the event of a downturn.

 

We continue to focus on capturing the longest lease terms possible from well capitalised and stable tenants so that the security of income and cash inflow is optimised.

 

The WAULT of our income is 8.7 years, highlighting the security of income from our high quality tenants.

Stable - the rate of capital and rental growth for Dublin offices, where our portfolio is most concentrated, has moderated to more stabilised levels.

 

Both the occupier market and the investment market for offices and logistics continue to perform well, underpinned by a strong underlying real economy in Ireland.

 

The spread between Irish property yields and the risk-free rate remains supportive of property values. We continue to monitor movements in interest rates in the EU and elsewhere, which could have a bearing on real estate prices in Ireland.

 

The outcome of Brexit and its impact on the Irish economy is as yet unknown.

Slowdown in Economic Growth - as a very open economy, the Irish economy is highly dependent on the wider European market and indeed the world economy.

Any slowdown or reversal in the current trajectory of economic recovery could reduce the demand for space in our buildings and impact on rental values and property values, while potentially increasing the level of tenant default. It could also have an adverse impact on the level of investment in Irish commercial real estate, particularly among international investors.

The Company's property portfolio is entirely focused on city locations, primarily Dublin, as large centres of population have proven to be more resilient economically.

The Company targets well capitalised tenants with strong covenants and maintains a policy of keeping a diversified multi-sectoral tenant base to avoid over exposure to any one tenant or industry sector.

 

Our assets are predominantly in prime locations, which are more resilient in a downturn.

Stable - the Irish economy continues to perform well, albeit at a more moderate and stable growth rate, but well ahead of the Eurozone average. Macroeconomic indicators around employment growth, unemployment levels, consumer spending, business investment and FDI-related job creation remain positive. However, there continues to be a heightened level of geopolitical and economic uncertainty, in particular around Brexit, and to a lesser extent around trade wars and the strength of the world's largest economies, which we continue to monitor.

Dublin office market - overreliance on the technology sector

A slowdown in this sector globally, and a consequent slowdown in the growth rate of tech companies in Ireland, particularly US tech, could lead to a softening in Dublin office rents and valuation yields, given the importance of these companies, which were responsible for 51% of total gross take-up in Dublin for 2018 (source: CBRE)  

The Company maintains a policy of keeping a diversified multi-sectoral tenant base to avoid over exposure to any one tenant or industry sector.

 

The Company adopts a rigorous approach to evaluating the covenant strength of prospective tenants, focusing on profitability and cashflow.

 

At 31 December 2018, 20% of the Company's contracted annual rent was from TMT tenants, of which 10% is from Vodafone, a global telecommunications company.

Increased - tech companies comprised 51% of total gross take-up in Dublin for 2018, compared with 36.5% in 2017 (source: CBRE) 

Constrained supply in the residential sector - potential adverse impact on growth prospects for the Dublin office sector.

Potential adverse impact on immigration, FDI job creation and GDP growth, with a potential knock-on effect on the Dublin office sector, if residential supply shortages and rising residential rental levels in Dublin are not adequately addressed by increased supply.

The Board monitors external risks closely and their potential impact on achieving the Company's strategic objectives. The Board also monitors the forecast levels of residential development and FDI.

Increased - while levels of new residential completions are increasing, with a 30% increase in 2018 (source: Goodbody), growth is off a very low base level and supply continues to lag behind demand. At the same time, the rates of net inward migration and urbanisation in Ireland are accelerating. The full extent of Brexit relocations and Brexit-related employment growth has yet to be seen, but it is likely to further strengthen residential demand.

Speculative Development Risk - occupiers do not take space in our new developments.

Potential adverse impact on revenue, value and void costs and on achieving target shareholder returns on capital.

The Board and the Investment Manager monitor market conditions closely, and have a conservative approach to speculative development.

 

While a property may not be let when a development or refurbishment commences, the marketing of the building commences well before the scheduled completion date.

 

Offices: of the 5 office developments which were commenced speculatively, 4 of these have been de-risked through lettings, leaving Building I in Central Park, which is due for completion in Q1 2019, as the only office development yet to be let. The Board is confident that the quality and location of this building will attract lettings in the short to medium term.

 

Logistics: at Horizon Logistics Park, our strategy is to combine a moderate level of speculative development with pre-lettings of new units. At present there are 3 units under construction, 2 of which, totalling 58,000 sq ft, are being built speculatively, while the third unit is a purpose-built unit for Bunzl of 115,000 sq ft. 

Decreased - overall this risk has reduced with the lettings completed within our development schemes during the year. Also, take-up in the occupational market remains robust for Dublin offices and prime Dublin logistics, where our developments are concentrated.

Geopolitical Risk - potential adverse impact from Brexit.

The ultimate outcome of Brexit may have an adverse impact on the Irish economy, depending on which way it goes, but it could potentially have a favourable impact on the Dublin office sector, some of which is already evident in the financial and technology sectors. As a very open, small economy, the uncertainty created by other geopolitical issues could adversely impact on both domestic investment and FDI, and consequently on both the real economy and commercial real estate in Ireland.

The Board monitors external risks closely and their potential impact on achieving the Company's strategic objectives. To date there has been no notable adverse impact from Brexit on the Irish economy; however, as we approach March 2019 we are likely to learn more.

Increased - the outcome of Brexit is still highly uncertain and it is therefore still not possible to tell what its impact will be for Ireland and for the Company.

Regulatory Risk - AIFMD - the Investment Manager is the authorised AIFM of the Company, under recently adopted EU regulations.

Should the Investment Manager cease to be authorised as an AIFM then the Company would be required to appoint a replacement AIFM and may suffer losses arising from the transition from its current Investment Manager to another.

The Board and the Audit Committee regularly discuss regulatory aspects and receive reports from the Investment Manager in respect of AIFMD compliance matters concerning both the Company and the Investment Manager. The Investment Manager in turn consults with its legal adviser and the Company's sponsor, Davy, who attend meetings with the regulator on behalf of the Investment Manager and the Company respectively.

 

The Company obtains independent legal advice in relation to AIFMD matters in order to keep abreast of developments and to ensure compliance by the Company with its obligations under AIFMD.  

Stable.

Cyber Attack Risk

A cyber-attack could lead to potential data breaches or disruption to the Company's systems, website and operations, and to reputational damage.

The Company engages external specialists to carry out periodic vulnerability and penetration testing on its website, implementing any recommendations made.

 

Routine patch upgrades are carried out on the Company's systems to safeguard them from attacks.

 

The Investment Manager has an Information Security Policy Framework to which it and its staff comply.

Increased - there has been an increased prevalence in cyber-attacks globally in the past 12 months.

Business Interruption Risk (extreme weather)

An extreme weather occurrence could result in damage to our buildings and business interruption for our tenants if there is restricted access to our buildings.

Asset emergency procedures are in place.

 

Asset risk assessments are carried out at the time of acquisition to assess risks including flood, environmental and health and safety (where appropriate).

 

We maintain appropriate insurances across the portfolio.

 

A Business Continuity Plan is in place.

Increased - there has been a greater prevalence of extreme weather events in Ireland of late which were classified as red weather warnings.

 

Internal risks

Risks

Potential impact

ü Mitigation measures

Direction of risk

Non-compliance with environmental legislation and sustainability best practise

Potential adverse impact on reputation, property values and shareholder returns.

The Company benchmarks its environmental, social and governance (ESG) reporting against industry benchmarks.

 

The Company reviews changes to Irish and EU legislation impacting on environmental and sustainability issues annually.

 

A Sustainability Report is produced annually (commenced in 2018).

 

The Company has set a 2021 target for reduction in energy consumption, water and waste.

Stable.

Reliance on key members of the Investment Manager team

Loss of knowledge and expertise in the event of the departure of certain key members of the management team, with the potential for disruption while they are being replaced.

The Board periodically discusses the retention of key members of staff with the principals of the Investment Manager, to understand what measures are used to retain and incentivise them. The Board also periodically discusses succession planning and the ability to replace key staff members, with the principals of the Investment Manager.  

Stable.

Development Completion Risk - inadequate cost oversight and other engineering/construction risks that could delay completion and/or increase costs.

Potential adverse impact on shareholder returns as a result of higher costs and/or delays in delivering new product into the market.

The Company only employs blue chip contractors with a strong and proven track record and with requisite financial strength.

 

The Company engages what it considers to be the best design team for each project, working closely with them to identify any cost overruns or delays as early as possible.

 

The Investment Manager closely monitors each project and works closely with the contractor, attending on site regularly.

 

The Investment Manager's development team is highly experienced in developing new buildings. 

Decreased - the Company has successfully completed four office buildings and various logistics units, thereby reducing the likelihood of this risk impacting the business. Building I in Central Park is due for completion in Q1 of 2019.

Development - Health and Safety - with increased development activity there is an increased risk of an accident which could result in a significant claim and reputational damage.

Potential reputational risk, potential completion delay and potential financial loss arising from a claim being made.

The Investment Manager ensures that all contractors engaged employ high standards of health and safety and carry the appropriate levels of insurance to mitigate any issues which could arise.

 

The Investment Manager is an experienced developer with formalised health and safety procedures. 

 

The primary responsibility for health and safety passes from the Company to the main contractor, with sub-contractors engaged by the contractor having no privity with the Company. 

 

There is adequate insurance cover in place to deal with any claims which might arise out of claims being made due to incidents. 

Decreased - the Company has successfully completed four office buildings and various logistics units, thereby reducing the likelihood of this risk impacting the business. Building I in Central Park is due for completion in Q1 of 2019.

STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

Statement of Directors' Responsibilities

 

The Directors confirm to the best of their knowledge that the condensed interim consolidated financial statements have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the Transparency Rules of the Central Bank of Ireland and with IAS 34 Interim Financial Reporting, as adopted by the EU, and to the best of their knowledge and belief:

 

a)   the condensed interim consolidated financial statements comprising the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

b)   the interim management report includes a fair review of the information required by:

·    Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the period from 1 July 2018 to 31 December 2018 and their impact on the condensed interim consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

·    Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place during the period from 1 July 2018 to 31 December 2018 and that have materially affected the financial position or performance of the entity during the period; and any changes in the related party transactions described in the last annual report that could do so.

 

Signed on behalf of the Board

 

 

                                               

Gary Kennedy                                     Jerome Kennedy                                26 February 2019

Chairman                                              Director                                   

Independent review report to Green REIT plc

 

Report on the condensed consolidated half year financial statements

 

Our conclusion

We have reviewed Green REIT plc's condensed consolidated half year financial statements (the "interim financial statements") in the half year report of Green REIT plc for the six month period ended 31 December 2018. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

What we have reviewed

The interim financial statements, comprise:

·      the condensed consolidated statement of financial position as at 31 December 2018;

·      the condensed consolidated statement of comprehensive income for the period then ended;

·      the condensed consolidated statement of changes in equity for the period then ended;

·      the condensed consolidated statement of cash flows for the period then ended; and

·      the explanatory notes to the condensed consolidated half year financial statements.

 

The interim financial statements included in the half year report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

 

Our responsibilities and those of the directors

The half year report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half year report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

 

Our responsibility is to express a conclusion on the interim financial statements in the half year report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom and Ireland. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We have read the other information contained in the half year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

PricewaterhouseCoopers

Chartered Accountants

26 February 2019

Dublin

 

Notes:

(a)   The maintenance and integrity of the Green REIT plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b)   Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Green REIT plc

Unaudited condensed consolidated statement of comprehensive income

For the six month period to 31 December 2018

 

 

31 December 2018

31 December 2017

 

Notes

Underlying pre-tax

Capital and other

Total

 

Underlying pre-tax

Capital and other

Total

 

 

 

€'000

€'000

€'000

€'000

€'000

€'000

 

 

 

 

 

 

 

 

Gross rental and related income

5

40,869

-

40,869

38,811

-

38,811

 

 

             

             

             

             

             

             

 

 

 

 

 

 

 

 

Rental income

5

34,400

-

34,400

33,682

-

33,682

Property operating expenses

5

(1,554)

-

(1,554)

(1,306)

-

(1,306)

 

 

             

             

             

             

             

             

 

 

 

 

 

 

 

 

Net rental and related income

5

32,846

-

32,846

32,376

-

32,376

 

 

 

 

 

 

 

 

Net movement on fair value of investment properties

6,9

-

25,358

25,358

-

31,288

31,288

Investment Manager base fee

18

(6,341)

-

(6,341)

(5,800)

-

(5,800)

Administrative expenses

 

(1,109)

-

(1,109)

(1,129)

-

(1,129)

 

 

             

             

             

             

             

             

 

 

 

 

 

 

 

 

Operating profit

 

25,396

25,358

50,754

25,447

31,288

56,735

Finance expense

7

(3,698)

(1,440)

(5,138)

(3,338)

(352)

(3,690)

 

 

             

             

             

             

             

             

 

 

 

 

 

 

 

 

Profit on ordinary activities before taxation

 

21,698

23,918

45,616

22,109

30,936

53,045

Taxation

8

-

-

-

-

-

-

 

 

             

             

             

             

             

             

 

 

 

 

 

 

 

 

Profit for the year after taxation

 

21,698

23,918

45,616

22,109

30,936

53,045

Other comprehensive income

 

-

-

-

-

-

-

 

 

____________

____________

____________

____________

____________

____________

Total comprehensive income for the period attributable to the shareholders of the Company

 

 

21,698

 

23,918

 

45,616

 

22,109

 

30,936

 

53,045

 

 

________

_________

_________

________

_________

_________

Basic earnings per share (cent)

14

3.1

3.4

6.5

3.2

4.5

7.7

Diluted earnings per share (cent)

14

3.1

3.4

6.5

3.2

4.5

7.7

 

 

_________

_________

_________

_________

_________

_________

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

 

Green REIT plc

Unaudited condensed consolidated statement of financial position

as at 31 December 2018

 

 

31 December

2018

30 June

2018

Assets

Note

€'000

€'000

Non-current assets

 

 

 

Investment properties

9

1,483,187

1,424,428

Financial assets

10

-

389

Trade and other receivables

11

27,970

32,062

 

 

                  

                  

Total non-current assets

 

1,511,157

1,456,879

 

 

                  

                  

Current assets

 

 

 

Trade and other receivables

11

8,709

4,541

Cash and cash equivalents

 

45,097

48,470

 

 

                  

                  

Total current assets

 

53,806

53,011

 

 

                  

                  

Total assets

 

1,564,963

1,509,890

 

 

                

                

Equity

 

 

 

Share capital

12

69,946

69,435

Share premium

 

663,022

655,760

Performance fee share reserve

 

-

7,773

Retained earnings

 

545,516

518,647

 

 

                  

                  

Equity attributable to shareholders of the Company

 

1,278,484

1,251,615

 

 

                  

                  

Liabilities

 

 

 

Current liabilities

 

 

 

Amounts due to investment manager - base fee

 

3,200

3,115

Trade and other payables

16

16,088

24,745

Borrowings

17

-

70,534

 

 

                  

                  

Total current liabilities

 

19,288

98,394

 

 

                  

                  

Non-current liabilities

 

 

 

Borrowings

17

257,478

149,652

Financial liabilities

16

1,051

-

Trade and other payables

16

8,662

10,229

 

 

                  

                  

Total non-current liabilities

 

267,191

159,881

 

 

                  

                  

Total liabilities

 

286,479

258,275

 

 

                 

                 

Total equity and liabilities

 

1,564,963

1,509,890

 

 

                

                

Basic net asset value per share (cent)

15

182.8

180.3

 

 

                

                

Diluted net asset value per share (cent)

15

182.8

178.9

 

 

                

                

EPRA net asset value per share (cent)

15

182.9

178.9

 

 

                

                

           

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Green REIT plc

Unaudited condensed consolidated statement of changes in equity

for the period ended 31 December 2018

 

 

 

 

 

Performance

 

 

 

 

 

Share

Share

fee share

Retained

 

 

 

 

capital

premium

reserve

earnings

Total

 

 

 

€'000

€'000

€'000

€'000

€'000

 

 

 

 

 

 

 

 

At 1 July 2018

 

 

69,435

655,760

7,773

518,647

1,251,615

Total comprehensive income for the period

 

 

 

 

 

 

 

Profit for the financial period

 

 

-

-

-

45,616

45,616

 

 

 

 

 

 

 

 

Transactions with owners, recognised directly in equity

 

 

 

 

 

 

 

Investment Manager - performance fee shares issued

 

 

511

7,262

(7,773)

-

-

Dividends paid

 

 

-

-

-

(18,747)

(18,747)

 

 

 

                

                

                

                

                

At 31 December 2018

 

 

69,946

663,022

-

545,516

1,278,484

 

 

 

                

                

                

                

                

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance

 

 

 

 

 

Share

Share

fee share

Retained

 

 

 

 

capital

Premium

reserve

earnings

Total

 

 

 

€'000

€'000

€'000

€'000

€'000

 

 

 

 

 

 

 

 

At 1 July 2017

 

 

69,035

650,478

5,682

426,984

1,152,179

Total comprehensive income for the year

 

 

 

 

 

 

 

Profit for the financial period

 

 

-

-

-

53,045

53,045

 

Transactions with owners, recognised directly in equity

 

 

 

 

 

 

 

Investment Manager - performance fee shares issued

 

 

400

5,282

(5,682)

-

-

Dividends paid

 

 

-

-

-

(34,517)

(34,517)

 

 

 

                

                

                

                

                

 

 

 

 

 

 

 

 

At 31 December 2017

 

 

69,435

655,760

-

445,512

1,170,707

 

 

 

                

                

                

                

                

                 

 

 

Green REIT plc

Unaudited condensed consolidated statement of cash flows

for the six month period to 31 December 2018

 

 

31 December

2018

31 December

2017

 

Note

€'000

€'000

Cash flows from operating activities

 

 

 

Profit for the period

 

45,616

53,045

Adjustments for:

 

 

 

-    Net movement on revaluation of investment

 

 

 

properties

6,9

(25,358)

(31,288)

-    Net movement on revaluation of financial assets

 

6

 

1,440

 

352

-    Finance expense

7

3,698

3,338

 

 

                  

                  

 

 

25,396

25,447

Changes in:

 

 

 

-    Trade and other receivables

11

(281)

(455)

-    Current liabilities and base fee due

16

(8,572)

(982)

-    Lease incentives

11

205

(6,496)

-    Long term other payables

16

(1,567)

2,286

 

 

                  

                  

Cash generated from operating activities

 

15,181

19,800

Interest paid

 

(2,743)

(2,842)

 

 

                  

                  

Cash inflow from operating activities

 

12,438

16,958

 

 

                  

                  

Cash flows from investing activities

 

 

 

Acquisition of investment properties

9

-

(2,867)

Capital expenditure on properties

9

(33,581)

(39,810)

Proceeds from sale of investment properties

9

-

9,145

 

 

                  

                  

 

 

 

 

Net cash used in investing activities

 

(33,581)

(33,532)

 

 

                  

                  

Cash flows from financing activities

 

 

 

Dividends paid

 

(18,747)

(34,517)

Drawdowns under revolving credit facility

 

127,969

42,728

Repayments under revolving credit facility

 

(89,809)

(1,400)

Costs associated with loan refinancing

 

(1,643)

-

 

 

                  

                  

 

 

 

 

Net cash inflow from financing activities

 

17,770

6,811

 

 

                  

                  

 

 

 

 

Net outflow in cash and cash equivalents

 

(3,373)

(9,763)

Cash and cash equivalents at beginning of period

 

48,470

48,797

 

 

                  

                  

Cash and cash equivalents at end of period

 

45,097

39,034

 

 

                  

                  

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

 

Green REIT plc

Notes

 

Notes to the condensed interim consolidated financial statements

 

1.  Reporting entity

 

Green REIT plc (the 'Company') is a Company domiciled in Ireland. The address of the Company's registered office is 32 Molesworth Street, Dublin 2.

 

The Company's Ordinary Shares were listed on the main markets for listed securities on the Irish Stock Exchange and the London Stock Exchange on Thursday 18 July 2013.

 

These unaudited condensed interim consolidated financial statements as at and for the six months ended 31 December 2018 comprise the Company and its subsidiaries (together referred to as the 'Group' and individually as 'Group entities').

 

2.   Basis of preparation

 

The Group condensed interim consolidated financial statements, which should be read in conjunction with the Annual Report for the year ended 30 June 2018, have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 and in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34) as adopted by the European Union.

 

These results are unaudited but were reviewed by our auditors. The interim consolidated financial statements herein do not constitute the statutory financial statements of Green REIT plc, which were prepared as at and for the year ended 30 June 2018, were approved by the Board of Directors on 25 October 2018 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified.  The next statutory financial statements will be prepared for the year ending 30 June 2019.

 

The preparation of the condensed interim consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of certain assets, liabilities, revenues and expenses together with disclosure of contingent assets and liabilities.  Estimates and underlying assumptions are reviewed on an ongoing basis.

 

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than twelve months from the date of this report. For this reason, the Directors adopt the going concern basis of accounting in preparing these condensed interim consolidated financial statements.

 

 

3.   Significant accounting policies

 

The accounting policies, significant judgements, key assumptions and estimates applied by the Group in these condensed interim consolidated financial statements are consistent with those applied in the 2018 Annual Report with the exception of the new standards effective for the first time in this financial period which are discussed below.

           

There are a number of new standards, amendments to standards and interpretations which are not yet effective for the period, and have not been applied in preparing these condensed interim consolidated financial statements. We are currently assessing the full impact of these amendments on the Group.

 

Impacts of standards effective from 1 July 2018

 

IFRS 9 - Financial Instruments

 

IFRS 9 replaces the provisions of IAS39 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.

 

The Group adopted IFRS 9 from 1 July 2018. The comparative figures have not been restated, which is in line with the transitional provisions. The impact of adopting the new standard is not material to the Group's consolidated financial statements and there was no adjustment to retained earnings on application at 1 July 2018.

 

IFRS 9 eliminates the previous IAS 39 categories for financial assets of held-to-maturity, loans and receivables and available-for-sale. Under IFRS 9, on initial recognition, a financial asset is classified as measured at amortised cost or fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVPL). On 1 July 2018 the Group assessed which business models apply to the financial assets held by the Group and has classified its financial instruments as follows:

 

 

 

Original Classification

New Classification

Carrying amount 1 July 2018

 

 

 

€'000

Trade and other receivables

Loans and receivables

Amortised Cost

36,603

Cash and cash equivalents

Loans and receivables

Amortised Cost

48,470

Interest rate swaps

FVPL

FVPL

389

 

 

Both trade and other receivables and cash and cash equivalents were classified as loans and receivables under IAS 39 and both are now classified at amortised cost as the Group's business model is to hold the financial asset to collect contractual cash flows and the contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding

 

Trade receivables are also subject to the new expected credit loss model in IFRS 9. The Group has applied the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for trade receivables.

 

IFRS 15 - Revenue from Contracts with Customers

 

The Group adopted IFRS 15 Revenue from Contracts with Customers' and the related 'Clarifications to IFRS 15 Revenue from Contracts with Customers' (hereinafter referred to as 'IFRS 15') which replaced IAS 18 'Revenue', IAS 11 'Construction Contracts', and several revenue-related interpretations from 1 July 2018. This results in some change to the accounting policies listed below. This standard applied to the accounting for service charge income but excluded rent receivable, the Group's primary income source, which is still within the scope of IAS 17. The adoption of the standard did not have a material impact on the condensed consolidated interim financial information included in this report. 

 

Service charge income and expenditure are recorded as income over the period in which the services are rendered. Revenue is recognised over time because the tenants benefit from the services as soon as they are rendered by the Group. The actual service provided during each reporting period is determined using cost incurred as the input method.

 

Impact of standards in issue but not yet effective.

 

The Group has considered the impact of the new standard IFRS16 and interpretations on its financial reporting and currently intends to apply the new requirements from 1 July 2019. The principal impact will be on the additional disclosure required by IFRS16. As stated in the standard, IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17, and accordingly the Group does not expect any material measurement change from the new standard.

 

The other new standards which have been issued and are not yet effective are not expected to have a material impact on the Group.

 

4.  Operating segments

 

The Group is organised into four business segments, against which the Group reports its segmental information, being Office Assets, Logistics Assets, Mixed Use Assets and Retail Assets. All of the Group's operations are in the Republic of Ireland. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who has been identified as the Board of Directors of the Company.

 

Unallocated income and expenses are items incurred centrally which are neither directly attributable nor reasonably allocable to individual segments. Unallocated assets are certain cash and cash equivalents, and certain other assets.

 

The Group's key measures of performance of a segment are net rental income and the movement in fair value of properties, as these measures illustrate and emphasise that segment's contribution to the reported profits of the Group and the input of that segment to earnings per share. By focusing on these prime performance measures, other key statistical data such as capital expenditure and once off exceptional items are separately highlighted for analysis and attention.  

 

Information related to each reportable segment is set out on the following pages:

 

 

 

Office

Assets

2018

€'000

Logistics

Assets

2018

€'000

Mixed Use

Assets

2018

€'000

Retail

Assets

2018

€'000

 

Total

2018

€'000

Unallocated

Expenses

and Assets

2018

€'000

Group

Consolidated

Position

2018

€'000

Six months to 31 December 2018

 

 

 

 

 

 

 

Gross rental and related income (1)

36,383

1,993

2,338

155

40,869

-

40,869

Rental income

30,374

1,796

2,075

155

34,400

-

34,400

Property outgoings

(1,458)

(39)

(53)

(4)

(1,554)

-

(1,554)

 

 

 

 

 

 

 

 

Net rental and related income

28,916

1,757

2,022

151

32,846

-

32,846

Net movement on fair value of investment properties

22,615

2,994

(184)

(67)

25,358

-

25,358

Investment Manager - base fee

(5,903)

(481)

(313)

(31)

(6,728)

387

(6,341)

Investment Manager - performance fee

-

-

-

-

-

-

-

Administration expenses

-

-

-

-

-

(1,109)

(1,109)

 

 

 

 

 

 

 

 

Segment profit before tax

45,628

4,270

1,525

53

51,476

(722)

50,754

Finance costs

(2,655)

-

-

-

(2,655)

(2,483)

(5,138)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

42,973

4,270

1,525

53

48,821

(3,205)

45,616

 

 

 

 

 

 

 

 

As at 31 December 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segment assets (2)

1,382,043

106,682

61,205

6,286

1,556,216

7,696

1,563,912

 

 

 

 

 

 

 

 

Investment properties and development property

1,315,831

103,631

57,780

5,945

1,483,187

-

1,483,187

 

 

 

 

 

 

 

 

(1)   Including service charge income

(2)  Total cash and cash equivalents and short-term deposits at 31 December 2018 were €45.1 million (30 June 2018 €48.5 million) of which €6.6 million (30 June 2018: €11.1 million) is unallocated to operating segments in the table above. 

 

 

 

Office

Assets

2017

€'000

Logistics

Assets

2017

€'000

Mixed Use

Assets

2017

€'000

Retail

Assets

2017

€'000

 

Total

2017

€'000

Unallocated

Expenses

and Assets

2017

€'000

Group

Consolidated

Position

2017

€'000

Six Months to 31 December 2017

 

 

 

 

 

 

 

Gross rental and related income (1)

30,519

971

2,715

4,606

38,811

-

38,811

Rental income

26,778

747

2,286

3,871

33,682

-

33,682

Property outgoings

(942)

(21)

(182)

(161)

(1,306)

-

(1,306)

 

 

 

 

 

 

 

 

Net rental and related income

25,836

726

2,104

3,710

32,376

-

32,376

Net movement on fair value of investment properties

42,654

(6,918)

(2,789)

(1,659)

31,288

-

31,288

Investment Manager - base fee

(5,444)

(281)

(332)

(352)

(6,409)

609

(5,800)

Investment Manager - performance fee

-

-

-

-

-

-

-

Administration expenses

-

-

-

-

-

(1,129)

(1,129)

 

 

 

 

 

 

 

 

Segment profit before tax

63,046

(6,473)

(1,017)

1,699

57,255

(520)

56,735

Finance costs

(2,022)

-

-

-

(2,002)

(1,668)

(3,690)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

61,024

(6,473)

(1,017)

1,699

55,233

(2,188)

53,045

 

 

 

 

 

 

 

 

As at 31 December 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segment assets (2)

1,239,857

62,502

61,084

142,884

1,506,327

13,446

1,519,773

 

 

 

 

 

 

 

 

Investment properties and development property

1,189,494

61,422

57,390

137,935

1,446,241

-

1,446,241

 

 

 

 

 

 

 

 

(1)   Including service charge income

(2)   Total cash and cash equivalents and short-term deposits at 31 December 2017 were €39.0 million (30 June 2017 €48.8 million) of which €11.6 million (30 June 2017: €10.2 million) is unallocated to operating segments in the table above.    

5

Gross and net rental and related income

31 December

2018

31 December

2017

 

 

€'000

€'000

 

 

 

 

 

Gross rental and related income

 

 

 

Gross rental income

32,863

27,186

 

Spreading of tenant lease incentives/rent-free periods

1,537

6,496

 

 

                  

                  

 

Rental income

34,400

33,682

 

Service charge income

6,469

5,129

 

 

                  

                  

 

Gross rental and related income

40,869

38,811

 

 

 

 

 

Service charge expenses

(6,469)

(5,129)

 

Property operating expenses

(1,554)

(1,306)

 

 

                  

                  

 

 

 

 

 

Net rental and related income

32,846

32,376

 

 

                  

                  

 

 

6

Net movement on fair value of investments

2018

2017

 

 

€'000

€'000

 

 

 

 

 

Fair value gain on investment and development properties (note 9)

25,358

31,288

 

Fair value loss on financial assets (note 10 and 16)

(1,440)

(352)

 

 

                  

                  

 

 

 

 

 

Net movement on fair value

23,918

30,936

 

 

                  

                  

 

 

7

Finance expense

2018

2017

 

 

€'000

€'000

 

 

 

 

 

Loan interest

(2,266)

(2,567)

 

Swap interest

(178)

-

 

Commitment fees

(504)

(272)

 

Loan cost amortisation

(747)

(496)

 

Bank fees and other costs

(3)

(3)

 

 

                  

                  

 

 

(3,698)

(3,338)

 

Fair value movement of interest rate swaps

(1,440)

(352)

 

 

                  

                  

 

Net finance expense

(5,138)

(3,690)

 

 

                  

                  

 

8      Taxation

 

As disclosed in the 2018 Annual Report, Green REIT plc elected for group REIT status with effect from July 2013. As a result, the Group does not pay Irish corporation tax on the profits and gains from qualifying rental business in Ireland provided it meets certain conditions.

 

The Directors confirm that the Group has remained in compliance with the Irish REIT rules and regulations up to and including the date of this report.

 

9

Investment properties

 

 

 

 

 

Investment Property

Development Property

Total

 

 

€'000

€'000

€'000

 

 

 

 

 

 

At 1 July 2018

1,409,448

14,980

1,424,428

 

Additions:

 

 

 

 

-    Capital additions

3,096

29,884

32,980

 

-    Land

421

-

421

 

Reclassification to development

(294)

294

-

 

Reclassification to investment

49,373

(49,373)

-

 

Change in fair value

17,713

7,645

25,358

 

 

                  

                  

                

 

 

 

 

 

 

Balance at 31 December 2018 

1,479,757

3,430

1,483,187

 

 

           

          

          

 

Reclassification of properties

 

During the six months ended 31 December 2018, the Group reclassified certain lands at Horizon Logistics Park from Investment Property to Development Property.  This was done to reflect the planning permission that had been obtained for buildings on these sites and the Group's intention to develop them.

 

During the period the Group also reclassified Block I in Central Park, Dublin 18, from Development Properties to Investment Properties in line with the valuation methodology applied at 31 December 2018. The reclassification to investment also includes capital expenditure on development projects that were previously reclassified to Investment Property, such as Block H in Central Park, One Molesworth Street, 5 Harcourt Road and a number of units at Horizon Logistics Park.   

 

       Fair Value of Properties

 

The fair value of the Group's investment property at 31 December 2018 has been arrived at on the basis of valuations carried out at that date by external valuers appointed by the Group, namely CBRE Ireland (CBRE), Savills Ireland (Savills) and Jones Lang LaSalle Ireland (JLL).

 

JLL performed valuations on 47.0% of the investment property portfolio (by value), CBRE performed valuations on 47.8% of the portfolio and Savills performed valuations on the remaining 5.2%.  The fees earned by JLL, CBRE and Savills from the Group are less than 5% of their total Irish revenues.

 

The information provided to the valuers, and the assumptions and valuation methodologies and models used by the valuers, are reviewed by senior members of the Investment Manager.

 

The valuations performed by CBRE, Savills and JLL, which conform to the Valuation Standards of the RICS and with IVA 1 of the International Valuations Standards, were arrived at by reference to market evidence of transaction prices for similar properties. Quantitative information about fair value measurements using unobservable inputs (Level 3) at 31 December 2018, per property class, is set out below. For further analysis on value by sector, rental income and ERV by sector and vacancy by sector, please refer to Portfolio Analysis in Appendix 1.

 

Asset class

Input

Range

 

 

Low

Median

High

Office Assets - Dublin CBD (13 buildings)

Annual rent per sq ft - €

23.17

50.20

64.01

ERV per sq ft - €

40.03

53.37

59.70

Equivalent yield %

4.00%

4.65%

5.68%

Vacancy rate

0.00%

0.00%

17.72%

 

 

 

 

 

Office Assets - South Dublin (Six buildings)

Annual rent per sq ft - €

22.81

24.75

27.00

ERV per sq ft - €

26.00

26.00

27.13

Equivalent yield %

4.80%

5.39%

5.52%

Vacancy rate

0.00%

0.00%

0.00%

 

 

 

 

 

Office Asset - One Albert Quay, Cork City (One building)

Annual rent per sq ft - €

22.00

25.00

27.50

ERV per sq ft - €

25.00

30.00

31.00

Equivalent yield %

5.50%

5.50%

5.50%

Vacancy rate

0.00%

0.00%

0.00%

 

 

 

 

 

Retail Assets (Three buildings)

Annual rent per sq ft - €

42.81

64.66

81.14

ERV per sq ft - €

56.74

60.00

80.00

Equivalent yield %

4.00%

4.46%

4.46%

Vacancy rate

0.00%

0.00%

41.71%

 

 

 

 

 

Logistics Asset - Horizon Logistics Park (Eight buildings)

Annual rent per sq ft - €

7.81

8.98

9.82

ERV per sq ft - €

9.00

9.50

9.95

Equivalent yield %

5.10%

5.50%

6.05%

Vacancy rate

0%

0%

100%

 

 

 

 

 

Mixed Use Assets (Two buildings)

Equivalent yield %

5.66%

-

6.56%

Vacancy rate

0.00%

-

9.86%

 

 

 

 

 

Development Assets - Industrial (Two buildings)

Net initial yield %

5.50%

-

5.50%

Build costs psf

€52.00

-

€56.50

Rental value psf

€9.50

-

€9.50

 

Low range on rent in Dublin CBD relates to an older building that has had little capital investment in the last 15 years.

 ERV and Rent per square foot are calculated on a lease-by-lease basis as there is only one building in this category.

 Unit D3 is excluded, as it is a specialised unit built to order, with a high office component. Its annual rent per sq ft is €30.40, it is fully occupied and its equivalent yield is 4.75%. Also, the 100% vacancy in the High range here relates to unit D4, the only vacant unit in the logistics park.

 Comprises Arena Centre in Tallaght, Dublin 24 and INM Building in Citywest, Dublin 24. Annual rent psf and ERV psf are not included as the units are not comparable.

 Rental value on development assets is the external valuers' view of expected rental value that will be achieved upon completion of the development.

 

 

Sensitivity of measurement to variance of significant unobservable inputs

 

A decrease in the estimated rental value will decrease the fair value.  Similarly, an increase in equivalent yield will decrease the fair value.  There are interrelationships between these rates as they are partially determined by market rate conditions.

 

Across the entire portfolio of investment and development properties, a 0.25% increase in equivalent yield would have the impact of a €74.7 million reduction in fair value whilst a 0.25% decrease in yield would result in a fair value increase of €82.0 million. On a similar basis, a 1.0% increase in the equivalent yield would have a €259.1 million reduction in fair value whilst a 1.0% decrease in yield would result in a fair value increase of €394.9 million. This is further analysed by property class, as follows:

 

 

Value +0.25%

Value -0.25%

Property Class

Equivalent Yield

Equivalent Yield

 

€'000

€'000

Office - Dublin CBD

(43,221)

47,851

Office - South Dublin

(21,990)

23,865

Office - Cork

(3,690)

3,980

Retail

(305)

337

Logistics

(3,220)

3,440

Mixed Use

(1,959)

2,238

Investment Properties

(74,385)

81,711

Development Properties

(297)

327

Total

(74,682)

82,038

 

 

 

Value +1%

Value -1%

Property Class

Equivalent Yield

Equivalent Yield

 

€'000

€'000

Office - Dublin CBD

(148,436)

234,183

Office - South Dublin

(77,062)

112,750

Office - Cork

(12,950)

18,710

Retail

(1,043)

1,674

Logistics

(11,300)

16,190

Mixed Use

(7,238)

9,905

Investment Properties

(258,029)

393,412

Development Properties

(1,055)

1,525

Total

(259,084)

394,937

 

10   Non-current financial asset

 

 

31 December

2018

30 June

2018

 

€'000

€'000

 

 

 

Total non-current financial assets

-

389

 

             

             

 

The non-current financial asset represents interest rate hedges entered into in respect of the Group's borrowings.

 

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. This does not qualify for hedge accounting and changes in the fair value of the derivative instrument are recognised immediately in profit or loss and are included in finance costs. Please see Note 16 for details of the position at 31 December 2018.

 

 

11    Trade and other receivables

 

31 December

2018

30 June

2018

 

€'000

€'000

Current

 

 

Tenant lease incentives

3,949

225

Trade receivables

1,621

747

Other receivables

3,139

3,569

 

                  

                  

 

8,709

4,541

Non-Current

 

 

Tenant lease incentives

26,082

30,011

Other receivables

1,888

2,051

 

                  

                  

 

27,970

32,062

 

_________

_________

Total trade and other receivables

36,679

36,603

 

                  

                  

 

Tenant lease incentives

Where a rent-free period is included as an incentive in a lease, the rental income foregone is allocated evenly over the period from the date of the lease to the earliest termination date of the lease. Where a lease incentive takes the form of an incentive payment to a tenant the resultant cost is amortised evenly over the remaining life of the lease to its earliest termination date. The balance included in trade and other receivables is the sum of these unamortised incentives which will be released over the term of the relevant leases to their earliest termination date.

 

The carrying value of all trade and other receivables approximates to their fair value.

 

Other receivables

Other receivables represent amounts due from property management companies for pre-funding of capital works and other service charge related items.

 

12    Share capital

 

The Company has one class of shares referred to as ordinary shares. All shares rank equally.  The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. Other than the issue of 5,114,736 performance shares on 5 October 2018 to the Investment Manager, there were no changes to the share capital in the period. These shares were issued to meet the Company's obligation with respect to the performance fee of €7.8 million earned for the year to 30 June 2018.

 

13    Dividends

 

In accordance with the Irish REIT regime, the Group is required, subject to having sufficient distributable reserves, to distribute to its shareholders (by way of dividend), at least 85% of the Property Income of the Property Rental Business arising in each Accounting Period.

 

On 19 October 2018 a dividend of €18.8 million was paid in respect of the financial year ended 30 June 2018. This was the second interim dividend for that financial year.

 

The Directors intend to declare an interim dividend of 2.8 cent per share for the six months to 31 December 2018, to be paid in March 2019.

 

14    Earnings per share

 

Basic and diluted earnings per share

 

Profit attributable to ordinary shareholders

 

31 December

2018

31 December

2017

 

€'000

€'000

 

 

 

Profit for the period, attributable to the owners of the Company

45,616

53,045

EPRA adjustment:

 

 

- Deduction of fair value movement on investment properties

(25,358)

(31,288)

- Addition of fair value movement on financial assets

1,440

352

 

___________

___________

EPRA Earnings

21,698

22,109

 

                      

                      

 

Weighted average number of ordinary shares

 

2018

2017

 

Number

Number

 

 

 

Effect of shares in issue on 1 July 

694,354,902

690,347,705

Effect of performance fee shares issued

2,918,735

2,352,050

 

                      

                      

 

 

 

Weighted average number of ordinary shares - basic and diluted

697,273,637

692,699,755

 

                      

                      

 

 

 

 

 

 

Basic earnings per share (cent)

6.5

7.7

Diluted earnings per share (cent)

6.5

7.7

EPRA Earnings per share (cent)

3.1

3.2

Diluted EPRA Earnings per Share (cent)

3.1

3.2

 

                      

                      

 

 

15    Net asset value per share

 

31 December

2018

30 June

2018

 

 

 

 

 

 

Net assets as at period end ('000)

€1,278,484

€1,251,615

EPRA adjustment - Add/(Deduct) fair value of financial derivatives ('000)

€1,051

(€389)

 

___________

___________

EPRA net assets as at 30 June ('000)

€1,279,535

€1,251,226

 

                      

                      

 

 

 

Ordinary shares in issue

699,469,638

694,354,902

Performance fee shares issuable

-

5,114,736

 

___________

___________

Ordinary shares including performance fee shares issuable

699,469,638

699,469,638

 

                      

                      

 

 

 

Basic NAV per share (cent)

Diluted NAV per share (cent)

182.8

182.8

180.3

178.9

EPRA NAV per share (cent)

182.9

178.9

 

                      

                      

 

The European Public Real Estate Association ("EPRA") issued Best Practices Recommendations most recently in November 2016, which gives guidelines for performance measures. Please see Appendix 2 for further details of these and other Alternative Performance Measures used.

 

 

16

Trade and other payables

 

31 December

2018

30 June

2018

 

 

 

€'000

€'000

 

 

 

 

 

 

Accrued expenditure

 

3,004

8,438

 

Deferred income and income received in advance

 

7,621

8,224

 

Trade creditors

 

219

1,006

 

Provision for service charge

 

950

1,188

 

VAT

 

826

461

 

Other creditors

 

3,468

5,428

 

 

 

______

______

 

Total trade and other payables - current

 

16,088

24,745

 

 

 

 

 

 

Long term VAT creditors

 

8,662

10,229

 

Financial liability (see Note 10)

 

1,051

-

 

 

 

______

______

 

 

 

25,801

34,974

 

 

 

            

            

 

The carrying value of all trade and other payables is approximate to their fair value.

 

 

17    Borrowings

 

31 December

2018

30 June

2018

 

€'000

€'000

 

 

 

Current

 

 

Revolving credit facility

-

70,534

 

 

 

Non-current

 

 

Bank of Ireland Central Park facility

149,843

149,652

Revolving credit facility

107,635

-

 

________

________

Total borrowings

257,478

220,186

 

                

________                                 

 

As at 31 December 2018 the Company had a revolving credit facility with €109.2 million drawn against a limit of €210 million, at an interest rate of Euribor plus 1.8%. The amount presented in the financial statements is net of unamortised initial arrangement fees and associated costs of €1.6 million. The repayment date for this facility is September 2022, with the benefit of an option to extend the repayment date to September 2023. The facility is secured by way of a floating charge over the assets of the Company and its subsidiaries, excluding those assets secured to Bank of Ireland under the Central Park financing.

 

The Group has a second loan facility in place for €150 million with Bank of Ireland. The amount presented in the financial statements is net of unamortised initial arrangement fees and associated costs of €0.2 million. The facility has an interest rate of Euribor + 2.0% and the loan is repayable in June 2021, unless the extension option is exercised by the Company, in which case it will be repayable in June 2023. The loan is secured on the assets owned by the Group at Central Park, Dublin 18, along with the relevant rents from those properties.

 

 

18    Related parties

 

(a)  Subsidiaries

 

The Company's subsidiaries are detailed in the 2018 Annual Report.

 

The Company transacts with its 100% owned and controlled subsidiaries and has provided them with the necessary funding to facilitate the acquisition of the assets that now form part of the Group's overall assets. 

 

(b) Investment Manager - Green Property REIT Ventures DAC

 

Green Property REIT Ventures DAC is a related party by virtue of providing key management services to the Company. These services are set out in the IMA entered into on 12 July 2013.

 

Investment Manager role and responsibilities

The Investment Manager identifies possible property acquisitions for, and opportunities with a view to investment by, the Company by reference to the Company's investment policy and strategy and will be entitled to consult with professional advisers to assist it. Further information is included in our annual report.

 

Base fee

The base fee is paid to the Investment Manager in cash quarterly in arrears.  The base fee in respect of each quarter is calculated by reference to 1% per annum of EPRA NAV for that quarter. The total base fee earned by the Investment Manager in the period amounted to €6.3 million (2017: €5.8 million)

 

Performance fee

The performance fee is designed to incentivise and reward the Investment Manager for generating returns to shareholders. Further information is included in the annual report.

 

The condensed interim consolidated financial statements do not include a performance fee as the Board estimate that no performance fee will be payable in this financial year. The Board will determine any actual performance fee due for the year to 30 June 2019 in accordance with the provisions of the IMA, on the basis of the audited year end EPRA NAV.

 

Shareholding

At 31 December 2018, Green Property REIT Ventures held 32,499,942 ordinary shares in the Company. These shares were issued in full settlement of the performance fees for the years to 30 June 2015, 2016, 2017 and 2018.

 

(c)   Directors and key management personnel

 

The key management personnel of the Company are its Directors. During the six months

to 31 December 2018, the Company incurred Directors' fees, including taxes and expenses of €0.14 million.  There is no other Director or key management compensation paid by the Company.  

 

19    Subsequent events

 

There were no events subsequent to the reporting date that require adjustment to or disclosure in the condensed interim consolidated financial statements.

 

20    Capital commitments

 

The Group has entered into a number of development contracts to develop buildings at various locations. The total capital commitment for contracts entered into at the 31 December 2018 over the next 12-24 months is €21.9 million.

 

21    Contingent liabilities

 

No contingent liabilities have been identified by the Group that should be disclosed in these financial statements.

 

22    Board Approval

 

        These unaudited condensed consolidated financial statements were approved by the board on 26 February 2019.

 

 

APPENDIX 1 - PORTFOLIO ANALYSIS AT 31 DECEMBER 2018

RENTAL INCOME

 

 

Passing

rent €m pa

Contracted rent €m pa

ERV €m pa

Variance

v Dec-18 ERV

 

Vacant

ERV

€m pa

Office

Dublin CBD (2/4)

30.0

36.2

38.9

-7%

 

2.3

 

South Dublin

24.5

25.1

25.6

-2%

 

-

 

Cork

3.8

4.1

5.1

-20%

 

-

Office Total

 

58.3

65.4

69.6

-6%

 

2.3

Logistics

 

3.9

4.3

3.4

+26%

 

0.4

Mixed use

 

4.5

4.4

3.6

+22%

 

0.1

Retail

 

0.3

0.3

0.2

+50%

 

-

Total (Let properties only)

67.0

74.4

76.8

-3%

 

2.8

Breakdown on property by property basis, certain office schemes contain small element of retail

Excludes ERV of development assets under construction at 31 December 2018

Excludes vacant ERV of €2.8m. Total ERV €79.6m at 31 December 2018

 

LEASE LENGTHS & VACANCY

 

 

WAULT

(years)

Vacancy

(by floor area)

Vacancy

(by ERV)

Office

Dublin CBD (2/4)

9.7

5.6%

5.5%

 

South Dublin

7.2

-

-

 

Cork

8.2

-

-

Office total

 

8.6

2.4%

3.2%

Logistics

 

11.2

11.2%

11.2%

Mixed use

 

7.6

3.3%

2.7%

Retail

 

11.0

-

-

Total portfolio

 

8.7

3.9%

3.5%

Breakdown on property by property basis, certain office schemes contain small element of retail

Unexpired Term/ WAULT is the rent-weighted average remaining term on leases to lease expiry/ break date (whichever comes first). Excludes short-term licences.

Excludes ERV of development assets under construction at 31 December 2018

 

CONTRACTED RENTS VERSUS ESTIMATED MARKET RENTS (ERVs)

 

 

Average

contracted rent

(€psf)

Average

ERV

(€psf)

Variance

(v ERV)

Office

Dublin CBD (2/4)

49.80

53.40

-7%

 

South Dublin

25.30

26.50

-4%

 

Cork

23.70

28.50

-17%

Office total

 

35.10

37.60

-7%

Logistics

 

12.00

9.50

+26%

Mixed use

 

14.60

11.30

+29%

Retail

 

59.60

44.70

+33%

Total (Let properties only)

29.30

30.30

-3%

Breakdown on property by property basis, certain office schemes contain small element of retail

Let properties only. Excludes residential, hotel and car space rent (where applicable)

 

SECTORS BY VALUE

 

 

Net value

€m

% of

Group total

Office

Dublin CBD (2/4)

774.5

52%

 

South Dublin

460.1

31%

 

Cork

81.3

5%

Office total

 

1,315.9

88%

Logistics

 

103.6

7%

Mixed use

 

57.8

4%

Retail

 

5.9

<1%

Total portfolio

 

1,483.2

100%

Breakdown on property by property basis, certain office schemes contain small element of retail

 

LOCATIONS BY VALUE

 

 

Net value

€m

% of Group total

Dublin CBD (2/4)

 

780.4

53%

South Dublin

 

517.9

35%

Dublin Airport

 

103.6

7%

Dublin Total

 

1,401.9

95%

Cork

 

81.3

5%

Total Portfolio

 

1,483.2

100%

 

CONTRACTED RENT BREAKDOWN BY TENANT BUSINESS SECTORS

 

 

Contracted rent

€m pa

% of

Group rent

 

Banking

18.8

25%

Finance/ Financial Services

17.0

23%

Technology, Media and Telecommunications ('TMT')

15.1

20%

Flexible Office

4.7

6%

Logistics

4.2

6%

Retail Trade

4.0

5%

Public Administration

(Irish Government)

3.5

5%

Professional Services

3.0

4%

Other

4.1

6%

Total portfolio

 

74.4

100%

           

 

 

 

TOP 10 OCCUPIERS BY CONTRACTED RENT

 Tenant

Business

sector

Contracted rent

€m pa

% of

Group rent

Unexpired term

(years)

 

 

 

 

 

Allied Irish Bank

Banking

9.3

12.5%

 9.4

Vodafone

TMT

7.3

9.8%

 7.8

Fidelity International

Financial Services

3.7

5.0%

 9.1

Amundi (Pioneer Investment)

Financial Services

3.5

4.7%

 8.3

WeWork

Flexible Office

3.1

4.2%

19.7

Ulster Bank

Banking

3.0

4.0%

 7.6

Bank of America Merrill Lynch

Banking

2.8

3.8%

 5.2

The Commissioners of Public Works Ireland

Public Administration

2.8

3.8%

 4.3

Barclays

Banking

2.4

3.2%

11.1

Northern Trust

Financial Services

2.3

3.0%

 8.7

 

 

 

 

 

Top 10 tenants

 

40.2

54.0%

9.1

 

 

 

 

 

Remaining tenants

 

34.2

46.0%

8.4

 

 

 

 

 

 

Total portfolio

 

74.4

100%

8.7

Unexpired Term/ WAULT is the rent-weighted average remaining term on leases to lease expiry/ break date (whichever comes first). Excludes short-term licences

Appendix 2 - Alternative Performance Measures ('APMs')

EPRA Performance Measures

Consistent with other public real estate companies we include recommended best practice performance measures as defined by the European Public Real Estate Association ('EPRA'). Definitions of these measures and their calculations are set out below, along with their relevance.

EPRA Performance Measure

Unit

Definition of Measure

Note

Dec-18

Dec-17

EPRA Earnings

€'000

Recurring earnings from core operational activities

(i)

21,698

22,109

EPRA Earnings per share ('EPRA EPS')

Cent

EPRA earnings divided by the weighted average basic number of shares

(i)

3.1

3.2

Diluted EPRA EPS

Cent

EPRA earnings divided by the diluted weighted average number of shares

(i)

3.1

3.2

EPRA cost ratio including vacancy costs

%

Administrative and operating costs, including direct vacancy costs, divided by gross rental income. Costs include Investment Manager base and performance fees (if applicable).

(ii)

26.2%

24.4%

EPRA cost ratio excluding vacancy costs

%

Administrative and operating costs, excluding direct vacancy costs, divided by gross rental income. Costs include Investment Manager base and performance fees (if applicable).

(ii)

24.9%

23.8%

 

 

 

 

Dec-18

Jun-18

EPRA Net Asset Value ('EPRA NAV')

€'000

Net assets adjusted to exclude the fair value of financial instruments

(iii)

1,279,535

1,251,226

EPRA NAV per share

Cent

EPRA net assets divided by the number of shares at the balance sheet date on a diluted basis

(iii)

182.9

178.9

EPRA triple net assets ('EPRA NNNAV')

€'000

EPRA net assets amended to include the fair value of financial instruments and debt

(iii)

1,278,484

1,251,615

EPRA NNNAV per share

Cent

EPRA triple net assets divided by the number of shares at the balance sheet date on a diluted basis

(iii)

182.8

178.9

EPRA vacancy rate

%

ERV of non-development vacant space as a percentage of ERV of the whole portfolio of non-development space

(iv)

3.5%

4.4%

EPRA Net Initial Yield (NIY)

%

Annual passing rents at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of income producing property, increased by estimated purchasers' costs.

(v)

4.2%

3.9%

EPRA 'topped-up' NIY

%

EPRA NIY adjusted for the expiration of rent free periods (or other unexpired lease incentives such as discounted rent periods and step rents.)

(v)

4.7%

4.7%

 

EPRA Performance Measure

 

Relevance of Measure

 

EPRA Earnings

A key measure of the Company's underlying operating results and an indication of the extent to which current dividend payments are supported by earnings.

 

EPRA NAV and EPRA NNNAV

Provides shareholders with relevant information on the fair value of the Company's assets and liabilities as a real estate company with a long-term investment strategy, adjusting IFRS NAV for assets and liabilities not expected to crystalise, which in our case are the Company's hedging instruments which are intended to be held to maturity. EPRA NNNAV on the other hand reflects the fair value of all assets and liabilities regardless of whether they are expected to crystalise or not.

 

EPRA cost ratios

Enables meaningful measurement of the changes in the Company's operating costs from period to period. As the inputs to the measure are clearly defined by EPRA it also enables shareholders to compare the operating costs of the Company to those of other listed real estate companies. 

 

EPRA vacancy rate

Enables shareholders to measure the extent to which the Company's income producing property is vacant, based on the external valuers' estimates of ERV, which can be tracked between periods and compared to the vacancy rates of other real estate companies. 

 

EPRA NIY and 'topped-up' NIY

Enables shareholders to analyse the Company's portfolio valuations between periods and to compare them to the valuations of other property portfolios.

 

             

i. EPRA Earnings

Dec-18

Dec-17

 

 

 

 

€'000

€'000

 

 

 

Earnings per IFRS statement of comprehensive income:

45,616

53,045

 

 

 

Adjustments to calculate EPRA Earnings:

 

 

 

 

 

Changes in fair value of investment properties

(25,358)

(31,288)

 

 

 

Change in fair value of financial instruments

1,440

352

 

 

 

EPRA Earnings

21,698

22,109

 

 

 

 

 

 

 

 

 

EPS - Number of Shares:

'000

'000

 

 

 

Shares in issue at opening

694,355

690,348

 

 

 

Effect of shares issued during the period

2,919

2,352

 

 

 

Weighted average basic number of shares

697,274

692,700

 

 

 

Dilutive effect of shares issuable at 31 December

-

-

 

 

 

Diluted number of shares

697,274

692,700

 

 

 

 

 

 

 

 

 

EPRA Earnings per share (cent)

3.1

3.2

 

 

 

Diluted EPRA Earnings per share (cent)

3.1

3.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ii. EPRA Cost Ratios

Dec-18

Dec-17

 

 

 

 

€000

€000

 

 

 

Property operating expenses per IFRS income statement

1,554

1,306

 

 

 

Administrative expenses per IFRS income statement

1,109

1,129

 

 

 

Management fees per IFRS income statement

6,341

5,800

 

 

 

EPRA Costs (Including direct vacancy costs)

9,004

8,235

 

 

 

Direct vacancy costs

(425)

(220)

 

 

 

EPRA costs excluding vacancy costs

8,579

8,015

 

 

 

Rental Income per IFRS income statement

34,400

33,682

 

 

 

EPRA cost ratio including vacancy costs

26.2%

24.4%

 

 

 

EPRA cost ratio excluding vacancy costs

24.9%

23.8%

 

 

 

Notes:

 

 

 

 

 

Rental Income above excludes service charge income.

 

 

 

 

 

No overheads or operating expenses are capitalised.

 

 

 

 

 

The Company had no JV interests in either financial period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iii. EPRA NAV and EPRA NNNAV

Dec-18

Jun-18

 

 

 

 

€000

€000

 

 

 

NAV per the financial statements

1,278,484

1,251,615

 

 

 

Fair Value of Financial Instruments

1,051

(389)

 

 

 

EPRA NAV

1,279,535

1,251,226

 

 

 

Fair Value of Financial Instruments

(1,051)

389

 

 

 

EPRA NNNAV

1,278,484

1,251,615

 

 

 

 

 

 

 

 

 

NAV - Number of Shares:

'000

'000

 

 

 

Shares in Issue at Balance Sheet Date

699,470

694,355

 

 

 

Dilutive effect of shares issuable at balance sheet date

-

5,115

 

 

 

Diluted number of shares

699,470

699,470

 

 

 

 

 

 

 

 

 

EPRA NAV per share (cent)

182.9

178.9

 

 

 

EPRA NNNAV per share (cent)

182.8

178.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iv. EPRA vacancy rate

Dec-18

Jun-18

 

 

 

 

€000

€000

 

 

 

Annualised ERV of vacant space (income producing only)

2,800

3,500

 

 

 

Annualised ERV of portfolio (income producing only)

79,600

78,800

 

 

 

EPRA vacancy rate

3.5%

4.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v. EPRA Yields

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2018

Office

Logistics

Mixed Use

Retail

Total

 

 

€000

€000

€000

€000

€000

 

Investment property at fair value

1,315,831

103,631

57,780

5,945

1,483,187

 

Less: Development and Land

(12,455)

(33,401)

            -  

            -  

(45,856)

 

Completed property portfolio

1,303,376

70,230

57,780

5,945

1,437,331

 

Purchasers' Costs at 8.46%

110,266

5,941

4,888

503

121,598

 

Gross up completed property portfolio valuation

1,413,642

76,171

62,668

6,448

1,558,929

 

 

 

 

 

 

 

 

Annualised cash passing rental income

58,300

3,900

4,500

300

67,000

 

Property outgoings

(1,458)

(39)

(53)

(4)

(1,554)

 

Annual net passing rent

56,842

3,861

4,447

296

65,446

 

Annual cash rent on expiry of lease incentives

7,100

400

(100)

-

7,400

 

Topped-up annual net passing rent

63,942

4,261

4,347

296

72,846

 

 

 

 

 

 

 

 

EPRA NIY

4.0%

5.1%

7.1%

4.6%

4.2%

 

EPRA 'topped-up' NIY

4.5%

5.6%

6.9%

4.6%

4.7%

 

 

 

 

 

 

 

 

 

At 30 June 2018

Office

Logistics

Mixed Use

Retail

Total

 

 

€000

€000

€000

€000

€000

 

Investment property at fair value

1,270,673

89,970

57,830

5,955

1,424,428

 

Less: Development and Land

(27,435)

(34,279)

            -  

            -  

(61,714)

 

Completed property portfolio

1,243,238

55,691

57,830

5,955

1,362,714

 

Purchasers' Costs at 8.46%

105,178

4,711

4,892

504

115,286

 

Gross up completed property portfolio valuation

1,348,416

60,402

62,722

6,459

1,478,000

 

 

 

 

 

 

 

 

Annualised cash passing rental income

52,300

1,600

4,400

300

58,600

 

Property outgoings

(1,378)

(60)

(195)

(31)

(1,664)

 

Annual net passing rent

50,922

1,540

4,205

269

56,936

 

Annual cash rent on expiry of lease incentives

10,600

2,500

-

10

13,110

 

Topped-up annual net passing rent

61,522

4,040

4,205

279

70,046

 

 

 

 

 

 

 

 

EPRA NIY

3.8%

2.5%

6.7%

4.2%

3.9%

 

EPRA 'topped-up' NIY

4.6%

6.7%

6.7%

4.3%

4.7%

 

 

 

 

 

 

 

 

OTHER PERFORMANCE MEASURES

Gearing/Property LTV

 

 

 

 

 

As at

31-Dec-18

30-Jun-18

 

 

 

 

€m

€m

 

 

 

Total Debt

259.2

220.9

 

 

 

Property Portfolio Value

1,483.2

1,424.4

 

 

 

Gearing/Property LTV

17.5%

15.5%

 

 

 

 

 

 

 

 

 

The use of debt to increase the potential returns to shareholders is common in real estate companies. The disclosure of the gearing level assists an assessment by shareholders of the financial position of the company, in that it shows the extent to which debt is being used to enhance returns. It also assists shareholders in an assessment of the headroom that exists between the company's total property value and its borrowings, in the event that there was to be a reduction in the level of property values.   

 

 

 

 

Interest Cover

 

 

 

 

 

As at

31-Dec-18

30-Jun-18

 

 

 

 

€m

€m

 

 

 

Total Debt

259.2

220.9

 

 

 

Total Interest Rate

1.92%

1.90%

 

 

 

Annual Interest Cost

5.0

4.2

 

 

 

Annual passing rent

67.0

58.6

 

 

 

Interest cover - times

13.4

14.0

 

 

 

 

 

 

 

 

 

This metric illustrates the company's ability to cover the interest cost on its borrowings from its cash rents, showing the headroom between the two. It is related to the gearing level, in that if for example the company increases its level of borrowings to enhance returns to shareholders, the corollary is that its interest cost will increase in that scenario, the impact of which on its ability to cover that increased cost from rents can be measured by the interest cover ratio. Similarly, with stable borrowings but with an increase in interest rates a shareholder can assess the impact on the company's ability to service its debt in that scenario from its interest cover ratio, comparing it to prior periods. 

 

 

 

Total Return

 

 

 

 

 

Year ended

31-Dec-18

30-Jun-18

 

 

 

 

€m

€m

 

 

 

EPRA net asset value at balance sheet date

1,279.5

1,251.2

 

 

 

Add: Dividends paid in the year

36.8

52.6

 

 

 

Adjusted net asset value

1,316.3

1,303.8

 

 

 

EPRA net asset value at previous balance sheet date

1,168.8

1,149.9

 

 

 

Increase in adjusted net asset value

147.5

153.9

 

 

 

Total Return for the year

12.6%

13.4%

 

 

 

 

 

 

 

 

 

Total return measures the performance of the company in a given period in terms of both balance sheet growth and the income distributed to shareholders by way of dividend, which are the two key components of shareholder return from REITs. It is also the metric driving the calculation of performance fees payable to the Investment Manager (if applicable).

 

 

 

 

 

 

 

 

Investment Initial Yield and Portfolio Initial Yield

 

 

As at

31-Dec-18

30-Jun-18

 

€m

€m

€m

€m

 

Excl Purchasers Costs

Inc Purchasers Costs

Excl Purchasers Costs

Inc Purchasers Costs

Purchaser's Costs

 

8.46%

 

8.46%

Investment property value

1,437.3

1,558.9

1,362.7

1,478.0

Developments and land value

45.9

49.7

61.7

66.9

Property portfolio value

1,483.2

1,608.7

1,424.4

1,544.9

 

 

 

 

 

Contracted annual rent

 

74.4

 

71.7

 

 

 

 

 

Investment Initial Yield

 

4.8%

 

4.9%

Portfolio Initial Yield

 

4.6%

 

4.6%

 

 

 

 

 

Investment Initial Yield - this metric allows shareholders to assess the return on the company's portfolio of income producing assets from its contracted rents, being its stabilised rents once any temporary tenant incentives have expired. The measure, which is common in our industry, can be compared to that of other real estate companies for benchmarking purposes, and can be compared to yields on market transactions, allowing shareholders to make their own assessment as to the potential for an increase or decrease in values, if they view the company's yield to be above or below the yields being achieved on comparable transactions.

 

 

 

 

 

Portfolio Initial Yield - as per Investment Initial Yield above, this is in common use in our industry, but in terms of gauging the return on the entire portfolio (including development and land assets) rather than from income producing properties only.

 

 

                 

 

COMPANY INFORMATION

 

 

Directors                                                        Gary Kennedy (Chairman)

(all non-executives)                                        Pat Gunne

                                                                        Jerome Kennedy

                                                                        Gary McGann

                                                                        Stephen Vernon (British)

                                                                        Rosheen McGuckian

 

 

Secretary                                                       Niall O'Buachalla

 

 

Registered office                                           32 Molesworth Street

                                                                       Dublin 2

 

Registered Number                                       529378

  

Investment Manager                                    Green Property REIT Ventures DAC

                                                                        32 Molesworth Street

                                                                        Dublin 2           

 

 

Statutory Auditors                                        PricewaterhouseCoopers

                                                                        Chartered Accountants and Statutory Audit Firm

                                                                        One Spencer Dock

                                                                        North Wall Quay

                                                                        Dublin 1

 

 

Solicitors                                                         Arthur Cox

                                                                        Earlsfort Centre

                                                                        Earlsfort Terrace

                                                                        Dublin 2

 

 

Principal Bankers                                          Bank of Ireland

                                                                        39 St. Stephen's Green

                                                                        Dublin 2

 

                                                                       

External Property Valuers                           CBRE

                                                                        Connaught House

                                                                        1 Burlington Road

                                                                        Dublin 2

 

                                                                        Jones Lang LaSalle Limited

                                                                        Styne House

                                                                        Hatch Street Upper

                                                                        Dublin 2

 

                                                                        Savills

                                                                        11 South Mall

                                                                        Cork    

 

Corporate Brokers                                        Davy                           

                                                                       49 Dawson Street

                                                                       Dublin 2

 

J.P. Morgan Cazenove

29th Floor

25 Bank Street

Canary Wharf

London E14 5JP

 

 

Registrar

All general enquiries concerning holdings of shares in Green REIT plc, including notification of change of address, queries regarding dividend/interest payments or the loss of a certificate, should be addressed to the Company's registrar:

 

Computershare Investor Services (Ireland) Limited

Heron House

Corrig Road

Sandyford Industrial Estate

Dublin 18

Ireland

 

Our website

Our corporate website gives you access to Company information and includes a copy of our latest Annual Report and Accounts and copies of all regulatory and other releases issued by the Company. The website address is www.greenreitplc.com.

 

Investor queries

Please address queries to the Company's e-mail address: website@greenreitplc.com, for the attention of Niall O'Buachalla, or by post to 32 Molesworth Street, Dublin 2.

 

GLOSSARY OF TERMS

The following explanations are not intended as technical definitions, but rather are intended to assist the reader in understanding terms used in this report.

 

AIFM

An alternative investment fund manager within the meaning of AIFMD.

 

AIFMD

Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers.

 

Basic NAV per share

IFRS net assets divided by the number of shares in issue at the balance sheet date.

 

BMS

Building management system

 

Brexit

The referendum decision by the United Kingdom to leave the European Union.

 

CBD

Central Business District

 

Contracted annual rent

The value of the annual rent due by a tenant under a lease contract, disregarding any tenant incentives granted within the lease.

 

Earnings per share (EPS)

Profit after taxation attributable to owners of the Parent divided by the weighted average number of ordinary shares in issue during the period.

 

Economic cycle

The upward and downward movements of levels of gross domestic product and refers to the period of expansions and contractions in the level of economic activities around a long-term trend.

 

EPRA

European Public Real Estate Association.

 

EPRA BPR

EPRA's Best Practices Recommendations (BPR) for financial reporting by listed property companies.

 

EPRA NAV per share

EPRA net assets divided by the number of shares at the balance sheet date on a diluted basis (see page 34 for further details)

 

Equivalent yield

The internal rate of return from an investment property reflecting reversions to current market rent and such items as voids and non-recoverable expenditure but ignoring future changes in capital value.

 

Estimated rental value (ERV)    

ERV is the open market rent that a property can be reasonably expected to attain given its characteristics, condition, location and local market conditions.

 

Gearing

Calculated as the borrowings secured on an individual asset as a percentage of the market value of that asset, or the aggregate borrowings of a company as a percentage of the market value of the total assets of the company (also referred to as loan-to-value or LTV ratio). In an investment strategy context, gearing refers to the use of various financial instruments or borrowed capital to increase the potential return of an investment.

 

Gross domestic product (GDP)

The market value of all officially recognised final goods and services produced within a country in a given period of time.

 

Group

The Company and its subsidiaries

 

HVAC

Heating, ventilation and air conditioning.

 

IAASA

Irish Auditing and Accounting Supervisory Authority

 

IAS

International Accounting Standards

 

IFRS

International Financial Reporting Standards

 

IMA

Investment Manager Agreement entered into by the Company and the Investment Manager (Green Property REIT Ventures DAC) on 12 July 2013.

 

Interest cover

The ratio of the company's total annual passing rent, or cash rent, at a point in time, to its total annualised loan interest cost based on loans outstanding at that date.

 

Investment income yield

The current annualised rent produced by investment properties, net of costs, expressed as a percentage of capital value, after allowing for notional purchaser's costs.

 

Investment initial yield

Annual contracted rental income expressed as a percentage of the valuation of income producing properties at a specified date plus applicable notional purchasers' costs of acquisition.

 

Irish REIT Regime

Part 25A of the Taxes Consolidation Act 1997 (as inserted by section 41 of the Finance Act 2013)

 

LEED

Leadership in Energy and Environmental Design, a widely used green building rating system.

 

Loan-to-value (LTV)

Calculated as the borrowings secured on an individual asset as a percentage of the market value of that asset.

 

Mixed use

A building or complex of buildings that blends a combination of residential, commercial, cultural, institutional, or industrial uses, where those functions are physically and functionally integrated.

Multifamily

A classification of housing where multiple separate housing units for residential inhabitants are contained within one building or several buildings within one complex.

 

Net Asset Value (or NAV)

The measure shown in a company's balance sheet of all assets less all liabilities, and is equal to the equity attributable to shareholders in any company or group.

 

The net asset value of the company will be measured consistently with International Financial Reporting

Standards ('IFRSs') as adopted in the EU, and in particular will include the company's property assets at their most recent independently assessed market values and also the company's debt and hedging instruments at their most recent independent valuations.

 

Occupancy

The extent to which a property or portfolio of properties is occupied by a tenant by way of a lease or license, measured by ERV. 

 

Occupier market

The office, industrial and retail market for lettings.

 

Passing rent

The annualised cash rental income being received as at a certain date, excluding the net effects of straight-lining for lease incentives.

 

Portfolio initial yield

Annual contracted rental income expressed as a percentage of the valuation of the overall property portfolio at a specified date plus applicable notional purchasers' costs of acquisition.

 

Prime asset

A highly regarded real estate asset due to, amongst other things, its location or quality of construction. An example of prime real estate asset would be a modern office building in the central business district of a major city.

 

Property Income

In relation to a company or group, the property profits of the company or group, as the case may be, calculated using accounting principles, as reduced by revaluation surpluses on the company's assets or increased by the revaluation deficits on the company's assets.

 

Property Income Distribution (or PID)

A dividend paid by an Irish REIT from its Property Income.

 

Psf

per square foot

 

Psm

per square metre

 

Property LTV

Calculated as the borrowings secured on an individual asset as a percentage of the market value of that asset, or the aggregate borrowings of a company as a percentage of the market value of the company's property portfolio (also referred to as Gearing). 

 

Reversionary

The gap by which the passing rent of a property or portfolio is below that of its ERV.

 

sq ft

square feet

 

sq m

square metres

 

TMT

Technology, media and telecommunications

 

Total return

The movement in net asset value between the beginning and the end of a financial period plus the dividends paid during the year, expressed as a percentage of the net asset value at the beginning of the financial period.

 

Vacancy

The extent to which a property or portfolio of properties is not occupied by a tenant by way of a lease or license, measured by ERV. 

 

WAULT

The weighted average period of unexpired lease term or if earlier period to the next lease break.

 

Yield

A measure of return on an asset calculated as the income arising on an asset expressed as a percentage of the total value of the asset, including costs.

 

FORWARD-LOOKING STATEMENTS

This interim results announcement may contain certain forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this announcement. The Company will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
IR EANASALPNEFF
Date   Source Headline
14th Nov 20196:12 pmRNSScheme is Effective and Completion of Acquisition
14th Nov 20193:30 pmRNSForm 8.3 - Green REIT plc
14th Nov 20193:23 pmRNSForm 8.3 - Green REIT plc
14th Nov 20193:20 pmRNSForm 8.3 - Green REIT Plc
14th Nov 20192:22 pmRNSForm 8.3 - [Green REIT Plc]

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