GRN.L Regulatory News (GRN)

INTERIM RESULTS FOR THE 6 MONTHS TO 31 DECEMBER 2017

Dublin, 20 February, 2018 - Green REIT plc, ("Green REIT" or the "Company"), the Irish property investment company, today announces its results for the six months ended 31 December 2017.

Strong financial performance despite stamp duty increase

§ Profit for the period of €53.1 million up 21.4% on the same period last year (December 2016: €43.7 million). EPS of 7.7 cent (December 2016: 6.4 cent)

§ 24.5% uplift in EPRA Earnings for the period to €22.1 million (December 2016: €17.8 million). EPRA EPS of 3.2 cent, up 23.4%

§ 19.2% increase in rental income to €33.7 million (December 2016: €28.3m)

§ EPRA NAV per share up 1.6% to 168.3 cent (June 2017: 165.6 cent), post payment of a 5 cent dividend and an increase in stamp duty from 2% to 6% in October 2017 (8.5 cent NAV impact)

§ Total return of 13.6% for the year to 31 December 2017 (2016: 13.5%)

§ LTV remains low at 22.1%, with an all-in cost of debt of 1.8%

§ Interim dividend of 2.6 cent per share for the 6 months to 31 December 2017

§ 5% increase in portfolio value in the 6 months to €1.45 billion, or 2% on a like-for-like basis

Development pipeline continuing to deliver; prime buildings attracting blue chip tenants

§ Completion of One Molesworth Street, adding €4.0 million of contracted annual rent and 5.3 cent/€36.8 million to NAV

§ Further €8.6 million of annual rent to come from developments in progress, €2.2 million of which has been secured at Horizon Logistics Park

§ Commenced construction of Building I in Central Park, with completion in Q4 2018 of this 9,000 square metre (97,000 square feet) office building Commenced construction of 3 new units at Horizon Logistics Park with one pre-let at an annual rent of €1.5 million, with 19,200 square metres (207,000 square feet) now under construction at the logistics park

§ Further 28 acres of land acquired at Horizon Logistics Park, bringing total land holding to circa 300 acres, providing short, medium and longer term optionality

§ Potential future development of 37,200 square metres (400,000 square feet) at Central Park, post Building I

Rent roll continues to grow, with income security further enhanced

§ 5.5% increase in contracted annual rent to €72.7 million in the period

§ Potential to grow contracted annual rent to €87 million through developments in progress, reversion and letting of vacant space

§ New lettings driving record WAULT of 8.2 years

§ Seven rent reviews settled with an 11% rental uplift, increasing annual rent by €1.0 million

§ 5% reversionary potential across the standing portfolio

Dividend growth from increased EPRA Earnings; 4% guidance on NAV remains

§ 5 cent per share paid in October 2017, or 3% of NAV at 30 June 2017

§ 2.6 cent interim dividend for the 6 months to December 2017, or 80% of EPRA Earnings for that period, to be paid in March 2018

§ Guidance of a dividend of 4% per annum on NAV remains, post completion and letting of our developments in progress

Gary Kennedy, Chairman of Green REIT plc, commented: "Our strategic focus continues to be on driving risk adjusted returns for shareholders, through our development schemes and a progressive dividend policy which is underpinned by a high quality portfolio and managed by a highly skilled and experienced team. We continue to operate against a backdrop of sustained economic growth in Ireland, and a robust occupier market in our key sectors, Dublin offices and logistics."

Pat Gunne, Chief Executive of Green Property REIT Ventures, added: "Profit from our development schemes, particularly the recently completed One Molesworth Street, was key to mitigating the unexpected trebling of stamp duty announced in the October 2017 budget. This, combined with the continued improvement in our rental profits showing a 24% rise, is testament to the high quality of our portfolio, and the underlying security of our income from strong tenants. Our asset management and development programme continues to be supported by a strong economic backdrop and robust take up by FDI and domestic occupiers."

ENDS

Contacts

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

Niall O'Buachalla, CFO

+353 (0) 1 2418400

FTI Consulting (IR and PR to the Company)

Dublin London

+353 (0) 1 7650800 +44 (0) 20 7831 3113

Jonathan Neilan Giles Barrie

Patrick Berkery Claire Turvey

greenreit@fticonsulting.com 

About Green REIT plc

Green REIT plc is an Irish Real Estate Investment Trust ("REIT") and is listed on the Irish and London Stock Exchanges. The Company was the first REIT established in Ireland following the introduction of REIT legislation by the Irish Government. The Company's stated strategy is to create a property portfolio consisting primarily of commercial property in Ireland to deliver income and capital growth through opportunistic investments, active property management and prudent use of debt finance. Please visit www.greenreitplc.com

Note on Forward-looking Statements

This interim results 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

The Company performed well in the first six months of the 2018 financial year, with further value and income contributions from our development schemes and an increase in net rental profit driving the €53 million profit in the period. In the absence of the stamp duty increase the profit for the period would have been €112 million.

Development pipeline continuing to deliver

The highlight in the period since 1 July 2017 was the completion of the Company's flagship office building at One Molesworth Street in Dublin's core. Tenants signed up for the building are Barclays Bank, Goshawk Aviation, The Ivy restaurant and Le Pain Quotidien, and we expect to confirm the letting of the top floor in the coming weeks. This development scheme has contributed significantly to net asset value ('NAV') in the period and to the Company's contracted annual rent, in line with our strategy of developing the highest quality office buildings in the best locations in Dublin and attracting the highest calibre occupiers.

The next office building due for completion is 5 Harcourt Road in Dublin city centre, in the second quarter of 2018. During the period we commenced the construction of Building I in Central Park, following the letting of the entirety of Building H to Allied Irish Banks plc in May of 2017. We look forward to the delivery of both of these prime buildings into what we expect will be a robust occupier market, and to their contribution to NAV and the Company's rent roll.

We continue to roll out our development programme at Horizon Logistics Park. The construction of Kuehne+Nagel's new unit is on target for completion in mid-2018, and we commenced the construction of a purpose built unit for a luxury goods company and of two new speculative units in the period. This will bring the total number of units at Horizon to ten, seven of which we will have built since we acquired the logistics park late in 2013. We look forward to further developing this strategic land holding of over 300 acres, which is considered to be the best located logistics land in Dublin, with easy access to Dublin Airport, the M50 orbital motorway and Dublin Port.

Contracted rent increases underpin progressive dividend strategy

The new lettings achieved at the Company's development schemes, along with the successful implementation of asset management initiatives, drove the Company's annual contracted rent to €72.7 million at 31 December 2017, or €74.9 million when two pre-lettings at Horizon Logistics Park are included. We estimate that annual contracted rent will reach €87 million when developments in progress are let, vacant space is leased and with the benefit of rental reversion. We have seen further strong growth in earnings, with EPRA Earnings growing by 24.5% over the same period in the prior year to €22.1 million (2016: €17.8 million), or 3.2 cent per share (2016: 2.6 cent per share).

We continue to focus on the quality and security of our income, as we drive contracted rent, all of which supports our progressive dividend policy. The Company paid a dividend in respect of the year to 30 June 2017 of 5 cent per share, on 20 October 2017. This represented 100% of the EPRA Earnings for the year to 30 June 2017 of 4.8 cent per share plus a further 0.2 cent per share from other reserves, an increase of 8.7% on the prior year dividend of 4.6 cent per share. The Directors intend to declare an interim dividend of 2.6 cent per share, or 80 per cent of EPRA Earnings for the six months to 31 December 2017. Our guidance of a dividend of 4% per annum on net asset value post the completion and letting of our development programme remains.

Ireland - Positive macroeconomic backdrop continues

Economic growth continues apace in Ireland, with all of the key indicators continuing to trend positive. Core domestic demand was up by 2.7% in 2017 and is forecast to grow by 4.3% in 2018 and by 3.7% in 2019 (source: Goodbody), both of which are expected to be well ahead of Eurozone averages, with consumer spending and construction being the main drivers of economic growth. Employment growth remains strong, growing by 2% in 2017 and forecast to grow by 2.6% in 2018 (source: Goodbody), with the national unemployment rate expected to fall further from its current level of 6.1% to 5.2% by late 2018, or close to full employment. This compares with a peak unemployment rate of 15.2% in early 2012. Focusing on Dublin office-based employment, which is a key metric for the Company, it grew at 3% in 2017 and is forecast to grow by 17% over the period from 2018 to 2027 (source: Oxford Economics).

Foreign Direct Investment ('FDI') continues to play a key role in the Irish economy, with the IDA, the government agency charged with attracting FDI to Ireland, reporting strong growth in its job creation numbers for 2017 of 5.3%, well ahead of the national average, and confirming that it secured a substantial number of Brexit-related investments for Ireland in 2017. As to whether recent changes in US corporate tax rates will adversely impact future FDI flows into Ireland, it is too early to tell, but the fact that the number one reason for US firms' locational choice is EU market access is a key consideration in this context.

While Brexit is expected to be a macroeconomic headwind for Ireland broadly, but favourable for Irish commercial real estate, Eurozone economic recovery looks to be a tailwind, with Q4 2017 GDP data confirming that 2017 was the strongest year of growth in the Eurozone in a decade. GDP growth in the Eurozone was up 2.7% in the fourth quarter and 2.5% overall in 2017, suggesting that the current 2018 consensus of 2.2% growth could prove too conservative. Eurozone interest rates remain low, and are expected to do so for some time, and although we have seen a recent uptick in sovereign bond rates, with the Irish government 10 year bond rate now standing at 115 basis points, compared with 72 basis points at 30 June 2017, they remain supportive of commercial property yields.

Stamp Duty Increase

In October 2017 the Irish Government increased the rate of stamp duty on commercial real estate transactions from 2% to 6% as part of its 2018 Budget, with immediate effect. This unexpected and significant tax increase, affecting the whole of the Irish commercial real estate sector, caused a one-off reduction in the value of the Company's property portfolio and its NAV at 31 December 2017 of €59 million, or 8.5 cent per share. Whether the higher rate of stamp duty adversely impacts on Irish real estate transaction volumes and pricing remains to be seen as we move further into 2018.

Summary Financial Results and Position

Board Changes

Thom Wernink resigned with effect from the conclusion of the Company's AGM on 1 December 2017. On 19 December 2017 the Company announced the appointment of Rosheen McGuckian to the Board for a three year term with effect from 1 January 2018. This appointment followed a process assisted by an external search consultancy. Rosheen has also joined the Board's Audit Committee. On behalf of the Board I would like to welcome Rosheen and to thank her for her positive contribution to date.

Outlook

The Company continues to operate against a favourable macroeconomic backdrop, with continuing strong growth in the Irish economy and strong FDI flows underpinning a strong occupier market in our two key sectors, offices and logistics. While commercial real estate investment volumes have moderated compared with the record recovery years of 2014 to 2016, we are now in a more stable environment where we are seeing core international capital bidding for prime Irish real estate, with the continuing low interest rate environment remaining supportive of real estate values. We continue to monitor the capital markets environment in light of recent moves in interest rates globally.

Our focus on delivering attractive risk adjusted returns to shareholders continues. The total return to shareholders for the year to 31 December 2017 was 13.6% (2016: 13.5%), achieved with moderate levels of gearing and a disciplined approach to speculative property development. We look forward to delivering further shareholder returns from the completion and letting of 5 Harcourt Road in Dublin city centre's core, Building I in Central Park and the four logistics units under construction at Horizon Logistics Park. These buildings will further enhance what we believe is a high quality and well-located portfolio with secure income from leases to the highest calibre tenants.

We acknowledge the importance of dividends as a component of shareholder return, and are committed to our progressive dividend policy, as highlighted by the confirmation of the intention to pay an interim dividend of 2.6 cent per share for the first six months of the financial year ending 30 June 2018.

Gary Kennedy

Chairman

20 February 2018

Business Review

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

§ Contracted rent €72.7 million at 31 December 2017 (up 5.5% on 30 June 2017)

§ Pre-lettings completed on 2 units at Horizon Logistics Park increase the annual contracted rent further to €74.9 million

§ WAULT of 8.2 years across the portfolio (8 years at 30 June 2017)

§ Predominantly Dublin (95% by portfolio value) with 5% in Cork city (One Albert Quay office building)

§ Dominated by high grade office assets (82%)

§ 95.7% occupancy rate by ERV (30 June 2017: 98.5%)

§ Value by sector: 82% offices, 10% retail, 4% mixed use and 4% logistics

§ Portfolio is 5% reversionary at 31 December 2017 with €72.7 million annual contracted rent versus €76.1 million annual ERV (both excluding developments in progress)

§ Diversified tenant base, with 46% of contracted rent from Financial Services, 21% from TMT and 15% from Retail

§ Top 10 tenants account for 53% of contracted rent, with our top 5 tenants accounting for 37% of the total

§ Yields:

¹ Calculated as contracted rent at 31 December/30 June 2017 over the valuation at those respective dates plus notional purchaser's costs applicable at those dates. See Appendix 2 for calculations and further details.

² Reflects the increase in stamp duty on commercial real estate from 2% to 6% introduced in October 2017

2. PORTFOLIO VALUATION

The portfolio was valued at €1.45 billion at 31 December 2017, which reflects a 13.2% increase in the value of assets held throughout the year to that date, or 5.2% in the six months to 31 December 2017. An analysis of the movement in portfolio valuation in the 6 months to 31 December 2017 is as follows:

Impact of Stamp Duty Increase

The Company's portfolio valuation at 31 December 2017 reflects the increase in the rate of stamp duty from 2% to 6% introduced by the Irish Government with immediate effect in October 2017 as part of the national budget. This stamp duty increase had a direct bearing on the valuation of the Company's portfolio at 31 December 2017, as follows:

The total valuation uplifts in the period were €31.3 million, €30.9 million of which came from developments in progress, net of capital expenditure in the period, with a €0.4 million valuation uplift on the Company's investment properties and lands. In the absence of the stamp duty increase set out above, these valuation uplifts would have been €40 million and €50.3 million respectively, or €90.3 million in total.

Valuation Movements in the 6 months to 31 December 2017

With regard to the valuation movements in the six months to 31 December 2017, the main drivers were as follows:

§ Developments: valuation increase of €66 million, or €30.9 million net of capital expenditure. In the absence of the stamp duty increase the valuation increase would have been €75.1 million, or €40 million net of capital expenditure

§ Investment Properties: income and ERV growth, which accounted for approximately 60% of growth, with yield contraction accounting for the other 40%.

The main individual valuation movements in the 6 months to 31 December 2017 were as follows:

§ One Molesworth Street, Dublin 2: €51.1 million valuation increase gross of capital expenditure of €14.3 million in the period. This development scheme completed in the period, eliminating the construction risk, with long term lettings to Barclays Bank Ireland, Goshawk and The Ivy secured, thereby substantially reducing the leasing risk, at rental levels ahead of valuer ERVs in June 2017. The equivalent yield reduced from 5.25% in June 2017 to 4.20% at 31 December 2017;

§ 5 Harcourt Road, Dublin 2: €8.2 million valuation increase gross of capital expenditure of €5.2 million in the period. This development scheme is now closer to completion (quarter 2 of 2018) and will be valued as a completed building at 30 June 2018;

§ Central Park, Dublin 18: €7 million valuation increase gross of capital expenditure of €6.6 million in the period, with ERV relatively constant between the periods. The main valuation increase within the business park was at Building H, let to Allied Irish Banks plc, where the equivalent yield decreased from 5.25% to 5%;

§ 32 Molesworth Street, Dublin 2: €7 million valuation increase due primarily to a reduction in the equivalent yield from 4.6% to 4%, reflecting the movement in prime Dublin office yields in the period, and with a 5% increase in valuer ERV in the period; and

§ 3 Burlington Road, Dublin 4: €5 million valuation increase, driven by the settlement of a rent review in the period which saw a 6% increase in rent, and a minor element of yield compression. 

PORTFOLIO VALUATION ANALYSIS

Note: the % movements above do not reflect capital expenditure incurred in the respective accounting periods. Capital expenditure in the period to 31 December 2017 is set out in the table on page 7.

3. NEW LETTINGS

In the six months to 31 December 2017 the Company entered into new leases with total new contracted rent of €5.54 million per annum, all of which came from the letting of development assets.

Principal lettings completed since 30 June 2017

One Molesworth Street, Dublin 2:

I. Barclays Bank Ireland - €2.4m contracted annual rent

In August of 2017 the Company signed an agreement with Barclays Bank Ireland plc ('Barclays') to lease 3,460 square metres (37,251 square feet) of lettable space at One Molesworth Street in Dublin 2.

The letting covers two and a half floors of a total of five floors of office space, with Barclays having an option up to the end of March 2018 over a further half a floor, which if taken up would bring the letting to approximately 4,200 square metres (45,000 square feet). The lease duration is 20 years, with a tenant break option at the end of year 12. The annual rent payable by Barclays is €2.4 million, which equates to €670 per square metre (€62 per square foot) per annum for office space and €4,000 per car space per annum, with the tenant entitled to a twelve month rent free period at the outset of the lease in February 2018. The rent per square foot secured of €62 was 12.7% ahead of our then most recent rental estimate of €55 per square foot.

II. Goshawk Aviation - €0.85m contracted annual rent

In October 2017 the Company signed an agreement with Goshawk Management (Ireland) Limited ('Goshawk') to lease 1,220 square metres (13,144 square feet) of lettable space at One Molesworth Street.

The letting comprises the fourth floor plus five car spaces, on a 20 year lease, with a tenant break option at the end of year 13. The annual rent payable by Goshawk is €0.85 million, which equates to €700 per square metre (€65 per square foot) per annum for office space and €4,000 per car space per annum, with the tenant entitled to a nine month rent free period at the outset of the lease in February 2018. The rent per square foot secured of €65 was 18.2% ahead of our then most recent rental estimate of €55 per square foot.

III. The Ivy - €0.55m contracted annual rent

The Company signed an agreement with The Ivy restaurant group in early 2017 which was subject to certain planning conditions being satisfied. These conditions were satisfied in late 2017 and the agreement became unconditional at that point. The restaurant will be located in the ground and lower ground floors of the building, with frontage onto both Dawson Street and Molesworth Street, and will comprise 890 square metres (9,578 square feet) of lettable space. The lease term is 20 years, with no breaks, with an annual contracted rent of €0.55 million and with 12 months' rent free granted to the tenant from February 2018.

Horizon Logistics Park, Dublin Airport

Luxury goods retailer - €1.5 m estimated contracted annual rent

An agreement for lease was signed with a luxury goods retailer on a specialised design and build project which will be a very prestigious addition to the park, and which illustrates our ability to secure major FDI projects in this sector of the market. This high specification unit will comprise 4,440 square metres (48,000 square feet) with a mix of office and logistics space, with an estimated rent of €1.5 million per annum, which will be a significant boost to the income at the logistics park. The lease to be entered into at completion of the unit, which is expected in the third quarter of 2018, will be a 20 year lease with no break options, and subject to CPI indexation every 5 years.

4. DEVELOPMENT PROJECTS

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

In addition to the further €82.4 million of capital expenditure above that is required to complete these development schemes, €8.6 million is required in respect of the Company's development schemes at 32 Molesworth Street and Building H, Central Park, which were delivered in the fourth quarter of 2016 and the second quarter of 2017 respectively. This brings the Company's total capital commitments at 31 December 2017 to €91 million.

5. ACQUISITIONS AND DISPOSALS 

Acquisition - Additional Lands at Horizon Logistics Park, Dublin Airport

In September 2017 the Company acquired an additional circa 28 acres of lands adjacent to its holdings at Horizon Logistics Park, at a contract price of €2.8 million. This brings the Company's total land holding for Horizon Logistics Park to approximately 300 acres, 262 acres of which represent future development opportunity.

Disposal - Residential Units at Arena Centre, Dublin 24

In October 2017 the Company sold its 63 residential units at the Arena Centre in Tallaght, at a price of €9.25 million. This price reflected a profit on original cost in late 2013 of 130 per cent.

6. FINANCIAL REVIEW

Continuing on from the financial year ended 30 June 2017, the six months to 31 December 2017 saw further growth in underlying earnings and a positive contribution to profits from revaluation surpluses on the Company's development properties, in particular from One Molesworth Street. EPRA Earnings grew by 24.5% to €22.1 million for the 6 months (December 2016: €17.8 million), while revaluation surpluses were €30.9 million, with a total profit of €53.1 million (2016: €43.7 million). On a per share basis the total EPS for the period was 7.7 cent (2016: 6.4 cent), with EPRA EPS of 3.2 cent (2016: 2.6 cent).

The Company's NAV grew by 1.6% in the period, from €1,152.2 million to €1,170.7 million, or from 166.9 cent per share to 168.6 cent per share. EPRA NAV per share also grew by 1.6% in the period, from 165.6 cent to 168.3 cent.

The total return to shareholders in the calendar year to 31 December 2017, measured as the increase in EPRA NAV plus dividends paid in the period, was 13.6%, split as to 10.3% from EPRA NAV increase plus 3.3% dividend paid.

Please see Appendix 2 for further EPRA Performance Measures.

Total EPS for the period increased by 20.4%, from 6.4 cent to 7.7 cent, with the EPRA EPS component, which measures EPS on rental profit only, increasing by 23.4% compared with the same period in the prior year, from 2.6 to 3.2 cent per share. With regard to the conversion rate from gross rents to EPRA Earnings, this was consistent at 65% between the current and prior periods.

Gross rental income increased by €5.4 million, or by 19.2%, in the six months to 31 December 2017 compared to the same period in the prior year, explained principally by the following items:

1. Newly Completed Developments €3.4 million: Building H in Central Park contributed €2.2 million, 32 Molesworth Street contributed €0.9 million and new units at Horizon Logistics Park contributed €0.3 million, none of which were income producing in the prior period;

2. Rent Reviews €1 million: as a result of rent reviews being settled favourably in the period, with back rent at the higher level also being billed in the period;

3. New Lettings €1.3 million: €0.7 million at George's Quay and €0.3 million at One Albert Quay in Cork from leases entered into in late 2016, and €0.3 million from Westend Retail Park from 2 newly built units and a letting to Homesense; and

4. Sale of Properties (€1.1) million: Parkway Retail Park in Limerick was sold in March 2017, and the residential units in the Arena Centre in Tallaght were sold in October 2017.

Property outgoings of €1.3 million were €0.5 million higher than the same period in the prior year, due in the main to an increase in agents' fees arising from rent reviews settled in the period, of which there were seven, and an increase in vacant buildings costs due to certain parts of the George's Quay Estate becoming vacant during the period.

Administrative expenses were broadly in line between the periods, reducing slightly from €1.2 million to €1.1 million. For the full year we expect total administrative costs to be in the order of €2.2 million.

The base fee charged by the Investment Manager in the period year was €5.8 million (2016: €5.3 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 performance fee provision has been made at 31 December 2017.

NAV Growth

NAV, as measured by IFRS, increased from €1,152.2 million at 30 June 2017 to €1,170.7 million, an increase of 1.6% in the six months, or from 166.9 cent per share to 168.6 cent per share (both basic). As a result of the increase in the stamp duty rate on commercial real estate by the Irish Government in October 2017 the Company's portfolio valuation and its NAV at 31 December 2017 were adversely impacted by €59 million.

The main drivers of the growth in basic NAV per share between 30 June 2017 and 31 December 2017 are analysed as follows, which also includes a pro forma analysis of the impact of the stamp duty increase:

Gearing and Debt Profile

The Company's property LTV increased slightly in the 6 months to 31 December 2017, from 20.2% to 22.1%, with the total debt balance increasing by €41.4 million from €278.4 million to €319.8 million. Property LTV is expected to increase towards 26% as the Company deploys a further €91 million capital to complete its current development schemes, as guided previously. The Company funds its development costs and other capital outlays from its revolving credit facility with Barclays Bank Ireland and Ulster Bank Ireland, at an all-in cost of 1.7% per annum.

At 31 December 2017 the Company's interest cost stood at 1.8% per annum, with a weighted average debt maturity of 2.1 years.

A summary profile of the Company's debt at 31 December 2017 is as follows:

Hedging is 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, and were in a positive position for the Company of €1.89 million at 31 December 2017 (June 2017: €2.24 million).

The Directors intend to deal with the December 2018 maturity of the revolving credit facility during the first half of 2018, and will seek either to extend this facility or to refinance it with alternative financing. Given the moderate level of gearing involved (16.5% on this facility at 31 December 2017) and the quality of the underlying real estate portfolio and its income, the Directors are confident that longer term financing on similar terms will be secured.

Our Market

Economic Overview - Ireland's sustained economic growth continues

The Irish economic backdrop remains supportive of the Company's activities and strategy.

Modified total domestic demand growth for the year to the end of quarter three 2017 was 4.9% (source: CSO). Economic growth is being driven by domestic demand, as a result of higher employment, wage growth, tax reductions, consumer spending and a benign inflationary environment. The composite PMI for Ireland continues to show sustained growth, at 60.2 for December 2017.

Employment growth was 2.2% for the year to quarter three 2017. The total number of people employed is now at 2.2 million, back to within 2% of peak levels. As at January 2018 the unemployment rate was 6.1%, the lowest level since May 2008, and with further growth of 2.6% growth forecast for 2018 and 2.1% for 2019.

The IDA, the government body charged with attracting FDI to Ireland, continues to be highly successful, with FDI businesses located in Ireland now employing a total of 210,400 people, or circa 10.5% of those employed. It is still too early to gauge whether the impact of recent US corporate tax changes may have an impact on investment into Ireland.

In a recent report published by Enterprise Ireland, it noted that Ireland had the fastest growing tech worker population in 2017. In addition, led by strong employment growth, disposable incomes grew by 5.4% year-on-year in quarter three of 2017.

Inflation increased from 0% to 0.5% in the 6 months to December 2017, mostly as a result of higher energy costs. It is still modest when compared to the UK (3%) and to Europe (c.1.2%), with the devaluation of Sterling helping to keep our inflation rate lower through cheaper imports from the UK. As Ireland moves toward full employment, forecast for late 2018, and if wage inflation continues, the headline inflation rate is likely to come under pressure.

The total population of Ireland has increased by 12% in the last decade and stood at 4.8 million people (April 2017 census result), with 55% of the population under 40 years of age. In addition, since 2015 net inward migration has re-emerged and in the year to March 2017 reached 20,000 people. This is expected to increase in the coming years, and is needed to deal with expected labour capacity constraints.

Exports performed strongly in 2017, growing by 3.4% and forecast to grow by 4.2% in 2018. It is worth noting that in 2017, 13% of our exports were to the UK and 38% were to mainland Europe. That said, 44% of Ireland's agricultural exports are to the UK, so this sector of our economy is likely to be the most vulnerable to the outcome of Brexit.

The Government deficit fell to 0.2% of GDP in 2017 and some economists are forecasting a surplus for 2018. In addition, tax revenues increased by 6% in the year. The improving accounts have resulted in a welcome increase in Government spending, particularly on infrastructure.

Capital Markets - normalisation of investment volumes, with new core investors

Total investment spend came in slightly ahead of estimates, at €2.57 billion for 2017, which is down 43% on the €4.5 billion invested in 2016. This reduction and normalisation of volumes was expected, as we have transitioned from the de-leveraging phase to a more stable one.

Demand remains strong, particularly for core well let offices, retail, residential and logistics. We are seeing a more geographically diverse buyer group of core capital investors looking to deploy in the Irish market, with buyers now from a number of Asian markets in the mix for prime Dublin offices. In 2017 Irish buyers accounted for 42% of the market, followed by US buyers at 23%, European buyers at 17%, UK at 7% and the rest of the world at 11%.

The top ten investment transactions in 2017, which account of 41% of the total capital deployed, were as follows:

In 2017, office and retail investment accounted for 64% of total investment, followed by mixed use at 12%, residential at 10%, hotel investment at 6%, industrial/logistics at 6% and other at 2%.

Prime Equivalent Yields - prime Dublin CBD office yield now at 4%

In the six months to December 2017 we have seen yield compression in prime Dublin retail (high street) from 3.25% to 3.15%, with the prime Dublin CBD office yield moving from 4.65% to 4% between August and December 2017. A summary of the current key sectoral yields is as follows:

(Source: CBRE)

Property Returns - moderation to 6.4% in 2017 with increase in stamp duty

The MSCI index recorded total returns for 2017 for Ireland of 6.4% across all property sectors (12.4% in 2016). These moderating returns reflect a maturing phase in the cycle and also the fact that the rate of stamp duty on commercial property in Ireland increased in October 2017 from 2% to 6%, which has a direct impact on all commercial property valuations, which are valued on a net of costs basis. The industrial/logistics sector was the strongest performer in 2017, with a total return of 8.9%, followed by offices at 6.3% and retail at 5.6%.

Occupier Markets

Dublin Offices - record year for gross take-up

Tenant demand and the resulting leasing activity broke all previous records in 2017. Gross take-up reached 331,445 square metres (3.56 million square feet). This compares to the long run average of 185,800 square metres (2 million square feet). There were a total of 237 lettings of which 71% were in the city centre, with 51% of all lettings being done in the Dublin 2/4 district alone. To put this in context, the total take-up in Ireland was 65% of the combined take-up of the 6 largest regional cities in the UK in 2017, namely Manchester, Bristol, Leeds, Birmingham, Edinburgh and Glasgow.

Large space occupiers dominated take-up throughout 2017. There were ten deals of over 6,970 square metres (75,000 square feet), which accounted for 45% of the total take-up. If lettings between 1,395-6,970 square metres (15,000-75,000 square feet) are included, there were 41 deals in total and they accounted for 74% of take-up with the remaining 196 deals in the sub 1,395 square metres (15,000 square feet) range. 

The table below shows the top ten letting deals in Dublin in 2017:

*Owner Occupied (not let)

Take-up by sector for the year was as follows:

Dublin City Centre

Leasing activity in South Dublin was also strong with 71,100 square metres (765,300 square feet) of letting activity in 2017. In the year, there were 65 lettings in the suburbs which accounted for 29% of the total take-up figure. South Dublin accounted for 87% of total suburban take-up and computers/hi-tech accounted for 84% of letting activity, predominantly as a result of Microsoft's occupation in the period of its own newly built offices.

Current tenant demand in Dublin overall stands at approximately 235,000 square metres (2.53 million square feet) so it looks to be another strong year for leasing activity. There is strong growth in the co-working/flexible workspace sector, which although it only accounted for 5% of total take-up in Dublin in 2017, is expected to grow to significantly higher levels.

The greater Dublin office vacancy rate currently stands at 6.1%, down from 6.5% when we last reported. In Dublin 2/4 (core city centre) the overall vacancy rate is 5.7% (5% in September 2017) and grade A vacancy in Dublin 2/4 has increased from 2% to 3% (grade A vacancy as a percentage of the total market). The marginal increase in this vacancy rate is as a result of the increase in development completions. The vacancy rate in South Dublin is 6% (Feb 2017 8.4%) and the grade A vacancy rate in this submarket has decreased to 4.6% (February 2017: 5.9%)

New Dublin Office Development - Manageable Supply, Stable Rents

There is currently 406,200 square metres (4.4 million square feet) by gross development area of office space under construction in Dublin city centre in 34 schemes. This is down from 441,800 square metres (4.8 million square feet) in September 2017. In 2018, 208,100 square metres (2.2 million square feet) is due for completion, 61% of which is already let.

In addition, there is currently 53,100 square metres (571,600 square feet) under construction in five projects in the suburbs, 40% of which will complete in 2018 and the remainder in 2019.

Prime headline rents in Dublin city centre have increased to €700 per square metre (€65 per square foot), up from €673 per square metre (€62.50 per square foot) in September 2017. That said, rents at this level only relates to a handful of buildings, with average Dublin city centre office rents closer to €592-€619 per square metre (€55-€57.50 per square foot). Prime office rents in South Dublin are €306 per square metre (€28.50 per square foot), up from €296 per square meter (€27.50 per square foot) in September 2017.

Cork Office Market

The total take-up in the Cork office market was 19,000 square metres (205,000 square feet) in 2017, down marginally from 21,500 square metres (231,000 square feet) in 2016 due to a lack of suitable new supply.

The current Cork office vacancy rate is 10.5%, or 11% in the city centre, and 9% in the suburban market, but much of this space is older stock.

There is a total of 35,400 square metres (380,738 square feet) under construction in Cork, 17,400 square metres (187,664 square feet) of which is in the city centre, with the remainder in the suburbs and of the total figure 48% has been pre-let.

Rents for the best quality buildings in the city centre have reached €350 per square metre (€32.50 per square foot), up from €323 per square metre (€30 per square foot) six months ago. That said, incentives are considerably higher than Dublin and in some cases up to 24 months of rent free is being granted. Due to the tight supply of grade A accommodation, the prospects for further rental growth in Cork are strong.

Retail

Consumer spending in Ireland grew by 2.7% in 2017 and is forecast to see similar levels of growth in 2018. Core retail sales (excluding autos) were up 7% in volume terms and 3.9% in value terms in 2017. Employment and wage growth are boosting this sector and the low inflation is helping disposable incomes.

In general Brexit is having a negative impact on the retail sector in Ireland, with the weakness in Sterling encouraging consumers either to travel over the border or to shop online. On the occupier side, UK retailers in the main have put expansion plans in Ireland on hold, due to the uncertainty around Brexit and the impact on pricing. This has resulted in a thinner than normal list of tenants with requirements and much of the letting activity has been focused on the food and beverage sector.

Prime retail rents have remained stable over the last six months. Grafton Street, Dublin's main pedestrianized retail thoroughfare, stands at €6,300 per square metre (€585 per square foot), Henry Street and Dundrum Town Centre are at €4,500 per square metre (€418 per square foot) and Blanchardstown Shopping Centre is at €3,000 per square metre (€270 per square foot), all in terms of Zone A/ITZA. The MSCI index has recorded rental growth on Grafton Street of 3.8% and for retail warehouses of 2.8% in 2017.

Industrial and Logistics Sector

Take-up in 2017 reached a similar level to 2016, at 249,000 square metres (2.68 million square feet). As we have previously reported, there is generally a scarcity of modern accommodation available to let so this is potentially hampering leasing activity. In 2017 there were 162 transactions, compared to 183 the previous year.

The owner-occupier market is always a substantial feature of the logistics sector in Ireland, with many business preferring to own their own property. In 2017, lettings accounted for 54% of the total take-up, with the balance being owner-occupier transactions. We understand that there is current demand for in the order of 86,000 square metres (925,000 square feet) of space, which bodes well for the year ahead and for rents in particular. In 2017 we saw 6% rental growth and prime rents currently stand at €99.50 per square metre (€9.25 per square foot). Looking forward, the forecast is for 11% rental growth in 2018, finishing the year at €110 per square metre (€10.25 per square foot).

While it is difficult to quantify, the expectation is that online retail penetration will continue to increase and will boost demand from retailers for logistics units. The impact of Brexit may result in greater warehousing demands in Ireland for products manufactured here but currently stored in the UK for onward distribution.

There are now three developers (including Green REIT) that are building speculatively, which is a positive for a market that has a lack of modern accommodation.

Industrial/logistics investment in 2017 accounted for 5% of the total investment in the period, with prime Dublin yields trending stronger at 5.50%.

Sources

1. CBRE research reports

2. JLL research reports

3. Central Statistics Office website

4. IDA/Enterprise Ireland website

5. Goodbody research

6. Investec research

7. Davy research

8. Daft.ie

9. Central Bank of Ireland

Principal Risks

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. In the view of the Directors the principal risks and uncertainties reported on pages 24 to 27 of the Company's 2017 Annual Report remain valid at 31 December 2017. In light of the Irish Government's unexpected increase in the rate of stamp duty on commercial real estate in October 2017 the Regulatory Risk below has been expanded to include increases in taxes.

A summary of those principal risks and uncertainties is below.

External Risks

Internal Risks

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 2017 to 31 December 2017 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 2017 to 31 December 2017 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 20 February 2018

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 2017. 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.

The interim financial statements, comprise:

· the condensed consolidated statement of financial position as at 31 December 2017;

· 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.

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.

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

20 February 2018

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 cash flows

for the six month period to 31 December 2017

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

Green REIT plc

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 2017 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 2017, 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 2017, were approved by the Board of Directors on 20 October 2017 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 2018.

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 intend to deal with the December 2018 maturity of the revolving credit facility during the first half of 2018, and will seek to extend this facility or to refinance it with alternative funding. Given the moderate level of gearing in the Group and the quality of the underlying real estate portfolio and its income, the Directors are confident that the revolving credit facility refinancing and the financing of the Group's ongoing capital commitments can be achieved on acceptable terms.

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 the report. For this reason, the Directors adopt the going concern basis of accounting in preparing the 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 2017 Annual Report.

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.

The Group is in the process of assessing the impact of the new standards (IFRS 9, IFRS 15 and IFRS16) and interpretations on its financial reporting and currently intends to apply the new requirements from their EU effective dates. 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. As the Group's revenue is derived from leasing, IFRS 16 is the relevant standard which applies to income recognition, and not IFRS 15. The other new standards 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, Retail Assets, Logistics Assets and Mixed Use 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:

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.

1 Including service charge income

2 Total cash and cash equivalents and short term deposits at 31 December 2016 were €32.8 million (30 June 2016: €76.8 million), of which €3.2 million (30 June 2016: €55.6 million) is unallocated to operating segments in the table above.

5. Gross and net rental and related income

6. Net movement on fair value

7. Net finance (expenses)/income

8. Taxation

As disclosed in the 2017 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 property

The fair value of the Group's investment property at 31 December 2017 has been arrived at on the basis of valuations carried out at that date by external valuers CBRE, Savills and JLL. The valuations performed by CBRE, Savills and JLL, which conform to the Valuation Standards of the Royal Institution of Chartered Surveyors 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 2017, per property class, are set out in the table on the following page:

For further analysis on value by sector, rental income and ERV by sector and vacancy by sector please refer to Appendix 1: Portfolio Analysis. The annual rent per square foot and the ERV per square foot are shown on a building by building basis, with the exception of One Albert Quay, Cork.

Sensitivity of measurement to variance of significant unobservable inputs

An increase in the equivalent yield will decrease the fair value, similarly a decrease in the annual rent or the estimated rental value ("ERV") will decrease the fair value. There are interrelationships between these rates as they are partially determined by market rate conditions.

The table below shows the sensitivity based on changes in equivalent yield which is the key sensitivity identified by the Directors. Sensitivities in respect of the income assumptions are not included on the basis that such movements are not as sensitive to the valuation result. The change in long term vacancy rate was not considered significant and was not therefore sensitised, as the long term vacancy rates are low and lease contracts are long in duration.

Across the entire portfolio of investment and development properties, a 0.25% increase in equivalent yield would have the impact of a €72.5 million reduction in fair value whilst a 0.25% decrease in yield would result in a fair value increase of €81.6 million. A 1.0% increase in equivalent yield would have a €253.2 million reduction in fair value and a 1.0% decrease in equivalent yield would have a €382.2 million increase in fair value. These are further analysed by property class, as follows:

10. Non-current financial asset