GRN.L Regulatory News (GRN)

Press Release

INTERIM RESULTS TO 31 DECEMBER 2014

STRONG NAV GROWTH OF 11% IN THE 6 MONTH PERIOD; ASSET MANAGEMENT AND DEVELOPMENT INITIATIVES PROGRESSING WELL; DUBLIN MARKET PERFORMING STRONGLY

GRN ID GRN LN

Dublin & London, 23 February, 2015 - Green REIT plc, ("Green REIT" or the "Company"), the Irish property investment company, announces its results for the 6 months to 31 December 2014.

Highlights | 6 month period to 31 December, 2014

· NAV growth of 11 per cent in the six month period to €1.21 per share (€1.09 at 30 June 2014) or €807 million (€728 million at 30 June 2014).

· Asset management initiatives well underway and yielding positive income and valuation results

· Developments progressing well, with an application for planning permission lodged for Molesworth Street, a grant of planning received for Horizon Logistics Park and an extension of 5 years to the master planning permission for Central Park granted in the period.

· Strong valuation increases, particularly from properties acquired early in the cycle

· Sapphire Portfolio and 13-17 Dawson St acquisitions completed in October (aggregate contract price €398 million).

· Annual passing rent has increased by €24.4 million to €53.0 million between 30 June 2014 and 31 December 2014 (or by €35.7 million when compared to 31 December 2013 annual passing rent of €17.3 million).

· Revolving credit facility put in place with Barclays Bank Ireland plc for €150 million, with the option to increase to €290 million.

· Equity fully invested, well ahead of expected investment timeframe. Adequately capitalised for current needs with Barclays facility.

· Dividend of €6.1 million, or 0.92 cent per share, to be declared for the period to 30 June 2014, to be paid in cash on or before 23 March 2015.

Financial Highlights

Portfolio highlights as at 31 December, 2014

· Portfolio comprises 24 properties with a total passing rent of €53 million per annum at 31 December 2014, or €54.5 million per annum when rent free periods expire

· Portfolio income yield of 6%

· Investment income yield of 6.1%

· Substantial property portfolio comprising 2.2 million square feet (204,000 square meters) of built space:

- Dublin Focus: 95% by value located in Dublin

- Office Focus: Office 74%, Retail 20%, Industrial 1% and Other 5%, by value

· Portfolio occupancy rate of 94% by Estimated Rental Value ('ERV')

· Portfolio weighted average unexpired lease term of 5.3 years (to earlier of lease break and expiry, excluding residential element)

· Sapphire Portfolio acquisition in the period added €23.3 million to annual passing rent, added 6 properties and 649,000 square feet (60,300 square meters) of high quality real estate in Dublin.

Gary Kennedy, Chairman of Green REIT plc, commented:

"The six months to 31 December 2014 was a busy period for the Company, during which it completed its largest acquisition to date, thereby fully investing equity raised from shareholders. Strong growth in NAV in the period of 11% reflects the successful implementation of the Company's investment policy to date and the strength of the Irish property market. Having assembled a substantial and high quality property portfolio the Board looks forward to continuing to work with the Investment Manager to exploit the opportunities within the portfolio and to deliver attractive returns for our shareholders. We continue to maintain a positive outlook for the year ahead."

Pat Gunne, Chief Executive, Green Property REIT Ventures Limited added:

"The second half of 2014 witnessed a continued escalation in Irish property values driven by rising rents and falling yields. The portfolio of assets assembled since the launch of the Company in July 2013 includes some of the best real estate in its class in Dublin, and the asset management programme in place for these quality assets should continue to drive shareholder value. The development side of our business will kick off in earnest in 2015 and marks the beginning of an exciting new era for Green REIT, in a market that has witnessed very little supply of new space since the market collapse in 2008. Ireland's economy growing again and European interest rates remaining at historic lows, provide a positive backdrop for the period ahead."

Contacts

FTI Consulting (IR and PR to the Company)

Dublin London

+353 (0) 1 6633686 +44 (0) 203 727 1000

Mark Kenny Claire Turvey

Jonathan Neilan Giles Barrie

Melanie Farrell

greenreit@fticonsulting.com greenreit@fticonsulting.com 

Green Property REIT Ventures

+ 353 (0) 1 2418400

Niall O'Buachalla

Note on forward-looking information

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 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.

Chairman's Report

The six month period to 31 December 2014 represented a further period of sustained activity for the Company. During the period the Company completed two acquisitions, the Sapphire Portfolio and 13-17 Dawson Street, both in Dublin. The Sapphire Portfolio, acquired for €375 million, was the Company's largest acquisition to date, and was also the single largest property transaction in the Irish market in 2014.

In the period, the Company put in place a new credit facility with Barclays Bank Ireland plc with an initial commitment of €150 million and with the facility to increase the commitments to €290 million. This flexible and cost effective facility will be used by the Company to finance its development pipeline and to fund opportunistic acquisitions which it may pursue. As at 31 December 2014 the Company had drawn €19.4 million under this facility, following the full investment of the equity raised from shareholders as part of the initial and secondary offerings.

The Company continues to execute its investment policy and to drive shareholder returns, focussing on the following three main areas:

1. Exploiting the active asset management initiatives identified for the portfolio;

2. Advancing the redevelopment and refurbishment opportunities of the six assets identified; and

3. Acquiring further assets that fit the Company's investment policy and which are accretive to NAV per share.

Financial Results and Position

Summary Financial Information

[1] Includes the 50% JV interest in the Central Park properties of €137.8m at 31 December 2014 and €116.9m at 30 June 2014

The key drivers of the increase in the Company's NAV by €79 million, or by 10.9%, between 30 June 2014 and 31 December 2014, were (i) a rental profit for the period of €7.9 million, (ii) a net movement in fair values by €45.5 million and (iii) a profit of €23.5 million from the Company's 50 per cent interest in the Central Park joint venture, mainly comprising an increase in fair value of €20.9 million and rental profit of €2.6 million.

With regard to property valuation, there was a valuation increase at 31 December 2014 of 12.5 per cent on those properties which were held at 30 June 2014, while there was an aggregate uplift of 7.8 per cent versus contract price on the Sapphire Portfolio and Dawson Street properties acquired in October 2014.

The Company's total annual passing rent at 31 December 2014 was €53.0 million, an increase of €35.7 million on the annual passing rent of €17.3 million at 31 December 2013, as a result of the significant acquisitions made by the Company in the year. Rental income of €16.1 million in the 6 months to 31 December 2014, compared to €1.7 million for the period to 31 December 2013, reflects the stabilisation of the portfolio following a busy period of acquisitions. However the full effect of the Sapphire Portfolio is not yet reflected, as it completed in mid-October.

First Dividend

The Board intends to declare the first dividend to be paid by the Company, in respect of the period to 30 June 2014. Subject to board approval a total dividend of €6.122 million, or 0.92 cent per share, will be paid in cash on or before 23 March 2015. This dividend will represent 85% of the Property Income from the Company's Property Rental Business in the period to 30 June 2014, as defined in Irish REIT legislation.

Outlook

Having been established as the first REIT in Ireland in July 2013 the Company continues to benefit from its efficient and disciplined deployment of capital at early stages in the recovery of the Irish economy and consequently the Irish property market. This is evidenced by the strong growth in NAV, driven mainly by increases in the value of the Company's property portfolio, and by a substantial rent roll of €53.0 million per annum. Macroeconomic conditions in Ireland continue to strengthen, particularly in Dublin, with the key indicators pointing to a period of sustained economic growth.

The Board looks forward to continuing to work with the Investment Manager to drive shareholder value by exploiting the asset management and development opportunities within the portfolio, while assessing further acquisition opportunities that fit with the Company's investment policy.

Gary Kennedy

Chairman

23 February 2015

Investment Manager's Report

The six month period to 31 December 2014 was a busy and a fruitful period for the Company and for the Investment Manager, Green Property REIT Ventures Limited. The highlight of the period was the acquisition of the Sapphire Portfolio for a contract price of €375 million. This acquisition, contracted in June 2014, absorbed almost all of the net equity raised as part of the Company's secondary offering which completed in May 2014. It also added €23.3 million to the Company's annual passing rent and 649,000 square feet (60,300 square meters) of high quality Dublin real estate to the portfolio.

As set out in the Company's Annual Report 2014, our focus is on executing our asset management and development strategies across the portfolio, in line with the business plans that are in place for each property. We continue to assess acquisition opportunities that fit with our investment policy, and indications are that 2015 will be another strong year for both the investor and occupier markets in Dublin and in the main urban centres of Ireland.

ASSET MANAGEMENT (Please see Appendix 1 for further information)

Highlights in the period since 1 July 2014 include the following:

· 16 new leases and licences were signed in the period, generating additional annual contracted rent of €1.25 million. This includes 10 short term lettings.

· The new lettings achieved were 13% ahead of 30 June 2014 rental values (excluding short term lettings)

· Notable lettings in the period include Wetherspoons, who have taken a 30-year lease paying €150,000 per annum (stepped increase year 6 to €231,000 per annum and year 11 to €254,000 per annum). They are about to commence a substantial refurbishment of the building and their gastro pub concept will be a positive addition to the food offer at West End Commercial. EZ Living have taken a 9,366 square foot (870 square meter) unit in Globe Retail Park on a 20-year lease (break year-7 and 14) paying €112,500 per annum. These rents will be payable on expiry of agreed rent free periods.

· There were virtually no tenant breaks or expiries in 2014, with the exception of two minor tenancies in Ormond Building. Here we are in the process of taking back space strategically to upgrade to open plan offices which we believe will yield a higher rental level in the current market. In the six months to 30 June 2015 there are lease events in 2% (by contracted rent) of the portfolio, equating to €1.25 million. These include expiries of leases in Dawson Street, which we are planning to redevelop, with the balance remaining to other tenancies where discussions are ongoing. 

· There was one lease re-gear completed in the period, of the leases to Leaseplan in Block C of Central Park. The average term of the leases was extended by 10 years. The amended rent per square foot of €23 compares to the valuer's ERV at 30 June 2014 of €17.50 per square foot.

· Looking forward, between 2016 and 2018, there are lease events in just over 57% of the portfolio. Engagement with tenants is on-going and lease re-gear/renewal discussions will be activated on a case by case basis.

· As at 31 December 2014 there was 6 per cent vacancy across the portfolio, of which 1.4 per cent was under offer/agreed, and a further 0.8 per cent was being held vacant as part of planned redevelopments. Agents have been appointed on all vacant space and active discussions are ongoing with a number of potential tenants.

DEVELOPMENT PROJECTS

The Company has six properties which were acquired for their development or refurbishment potential. Good progress in relation to five of the six properties has been made in the six months to 31 December 2014 in advancing these projects. Progress to date and an outline programme for each property is as follows:

- Central Park Block H - construction contract tendering process underway; expect to commence construction by H2 2015 under the existing planning consent for an office building of 147,000 square feet (13,656 square meters).

- 13-17 Dawson St: vacant possession to be secured in Q4 2015, with construction to commence in late 2015, subject to satisfactory planning consent being obtained and subject to board approval.

- 4-5 Harcourt Road: existing lease expires in October 2015. Construction expected to commence in Q4 2015/Q1 2016, subject to satisfactory planning consent being obtained and subject to board approval.

- Horizon Logistics Park: grant of planning received on Horizon Logistics Park in July 2014 for 77,000 square feet of industrial units. Possible commencement on site in 2015 for the construction of a unit of 44,000 square feet and/or 33,000 square feet (4,087 square meters and/or 3,065 square meters), subject to demand.

- 32 & Rear of Molesworth Street: Application for planning permission lodged in December 2014. Expect to commence construction once planning is granted.

- Central Park - an extension of 5 years to the master planning permission was granted in September 2014, extending it to December 2019.

· Development costs will be funded using the revolving credit facility entered into with Barclays Bank Ireland plc in December 2014, other than in the case of Block H Central Park, where bank funding may be procured at an appropriate point in the development phase.

· Please refer to our interim results presentation on the Company's website for further information on our development assets (see http://www.greenreitplc.com/investor-relations/regulatory-news/)

VALUATION

Comparing valuations at 31 December 2014 to the previous valuations at 30 June 2014, for those properties held at 30 June 2014, the position as follows:

The main drivers of the valuation movement in the period were lower investment yields and continued rental growth as a result of improving macro- and microeconomic conditions in Ireland. In addition, active asset management in agreeing new leases/licences has had a positive impact on values.

FINANCIAL REVIEW

The Company's financial results for the six month period to 31 December 2014 reflect the successful execution of the Company's investment policy and the strength of the Irish property market, in particular Dublin, where 95 per cent by value of the Company's property portfolio is located.

Net Asset Value ('NAV')

EPRA net asset value per share increased during the six months to 31 December 2014 to 121 cent from 109 cent at 30 June 2014, an 11 per cent increase. Over the twelve months to 31 December 2014 the increase in NAV per share was 25 per cent.

The increase in NAV in the six months to 31 December was driven mainly by property valuation increases but also by rental profit in the period, from the Company's 100 per cent owned properties and from its 50 per cent interest in the Central Park joint venture.

Income Statement and Earnings per Share ('EPS')

Profit for the period was €74.3 million, compared to a profit of €0.1 million for the same period in 2013. The sharp increase between the periods reflects the fact that having been established in July 2013, the Company's initial acquisitions were made in the fourth quarter of 2013, while in the first half of 2014 the 50 per cent interest in Central Park was acquired, among other acquisitions, which contributed for the full 6 month period to 31 December 2014 along with the acquisitions made in late 2013. In addition, although it closed in October 2014, the acquisition of the Sapphire Portfolio, with a rent roll of €23.3 million per annum, contributed to both rental profit and valuation uplift in the six months to 31 December 2014.

Rent receivable for the six months to 31 December was €16.1 million when service charge income is excluded, compared to €1.7m in the same period in 2013. This reflects the staggered nature of acquisitions to date. The six months to 30 June 2015 will be the first period in which all of the Company's current portfolio will generate a full six months of rental income.

Property outgoing expenses for the period were €1 million (2013: €0.3 million), or 6.2 per cent of rents receivable. These mainly comprise recurring property-related professional fees and landlord non-recoverables, in addition to set-up related costs of €0.4 million. Administrative expenses for the period were €0.7 million (2013: €0.5 million), reflecting the larger scale of the portfolio.

Investment Manager

The increased base fee charge of €3.8 million in the period (2013: €0.9 million) reflects the increased NAV of the Company on which the base fee is calculated, arising from a combination of the secondary offering in May 2014 which raised €400 million from shareholders and the increases in NAV set out above. The details of the performance fee provision are set out in further detail in note 18 of these results.

Financial Resources and Capital Management

During the period the Company put in place a revolving credit facility ('RCF') with Barclays Bank Ireland plc with a limit of €150 million which can be increased to €290 million at the Company's request. €19.4 million has been drawn on this facility to date, with €130.6 million undrawn, or €270.6 million undrawn against the increased limit of €290 million. This was the second debt facility put in place, the first being the Central Park non-recourse facility with Bank of Ireland, of which the Company's share is €75 million. The Company's gearing on property only is 10.7 per cent, while on total assets it is 10.3 per cent at 31 December 2014. The current annual interest rate on the €94.4 million of bank debt is 2.9%, with interest cover of 19 times and with a weighted average maturity of 3.5 years.

The Company currently has no intentions to raise further equity from shareholders. Its primary source of funding will be the Barclays RCF, while other forms of debt may be considered in the future. The Barclays RCF will be used to fund the development pipeline, currently estimated at €114 million excluding finance costs, and to fund opportunistic acquisitions.

With regard to debt headroom, on the basis of total assets of €915 million at 31 December 2014 and total gearing of 35 per cent, the Company's total debt headroom would be €493 million. Netting the existing debt of €94.4 million against this gives remaining unused debt headroom of €398 million.

The Central Park facility is hedged in full for its term through an interest rate cap at 2% EURIBOR while the Barclays facility is unhedged.

OUTLOOK

We look forward to what is expected to be another strong year for commercial real estate in Ireland and what should be a strong year for the Company. Having experienced one of the most severe economic downturns of any modern country in recent history, followed by a period of over five years of austerity measures, Ireland is once again a competitive and attractive country in which to do business. Consumer confidence has returned and the retail sector posted fourteen consecutive months of growth in both value and volume terms to December 2014.

While the continued Eurozone weakness and the uncertainty surrounding Greece are of concern, recent quantitative easing measures announced by the ECB and a continued weakness in the Euro and oil prices should impact positively on Irish exports, tourism and FDI, and consequently on GDP. This should lead to greater occupier demand, particularly for Dublin offices, where the Company's focus is centred. The low level of supply of new offices in Dublin in the short term, combined with expected strong occupier demand, should lead to growth in office rental values, while the expected high levels of capital looking to acquire Irish property should lead to continued growth in capital values. The sector also continues to benefit from the prevailing low interest rate environment.

The Company is in a strong position to take advantage of supply constraints in the Dublin office market, and through its debt headroom has the means to deliver new buildings on those sites earmarked for development and to acquire further properties that fit with the Company's investment policy and which will be accretive to shareholder value.

Stephen Vernon Pat Gunne

Executive Chairman Chief Executive

23 February, 2015

Irish Property Market Overview

MARKET OVERVIEW

As anticipated in our 2014 Annual Report, 2014 turned out to be a record year for property in Ireland with investment, loan sales and leasing activity at an all-time high. Bank deleveraging was the main source of opportunities and the increased activity levels look set to continue through 2015 as deleveraging continues and some early cycle, private equity buyers look to trade on some of their acquisitions.

At the macroeconomic level the key indicators are trending positive, with domestic demand on a positive trajectory. The European Commission is predicting 3.5 per cent growth in Irish GDP in 2015, the highest forecast among all 28 EU economies. Ireland's trade links with the US and the heavy presence of multinationals are expected to continue to benefit the economy. Forecasts are for net exports to continue to grow in 2015 and 2016, in spite of slowing growth in the UK and the low growth in the Euro-area. Ireland's largest export destinations are the US and the UK, which together account for in the order of 37 per cent of total exports, while the EU excluding the UK accounts for circa 40 per cent. Export growth is expected to be helped by the weaker Euro and the EU's quantitative easing plans.

INVESTMENT

Total direct investment in commercial real estate in Ireland reached €4.6 billion for 2014, which is a 25% increase on the previous high in 2006 and significantly ahead of the 10 year average of €1.4 billion per annum. It was also almost 2.5 times' the 2013 total investment.

The two main headlines for 2014 were the increase in the number of portfolio disposals and the emergence of retail as a sector of choice for many investors. Of the amount invested, offices still dominated, accounting for 29%, mixed use schemes accounted for 28%, retail was at 23% and residential at 11%. The remaining 9% was a combination of income-producing hotels, industrial and other classes of income producing assets. Greater Dublin still dominates activity levels, accounting for 72% of volume in 2014.

Demand continues to be strong. Of the total capital deployed, 15 transactions were over €100 million individually and of these, 7 were concluded in the final quarter of 2014. The depth of buyers has continued to expand and broaden. By year end, 55% of buyers in 2014 were classified as domestic and 45% overseas. The Irish REITs dominated, accounting for 30% of the total investment, mainly as a result of their formation in 2013/2014 and the natural desire to get their portfolios established in the early part of the recovery cycle. It remains to be seen what the composition of the buyer group will be in 2015. The emergence of a broader buyer base is welcomed, and we are starting to see more long-term, core capital bidding and buying in Ireland. We also expect to see some divestment by some of the earlier cycle, private equity investors.

Best estimates are that loan sales activity in 2014 totalled €21 billion, most of which were traded through large portfolios by the liquidator of IBRC, by NAMA and by Ulster Bank (part of RBS). To put this in context, total loan sales across Europe were €80.6 billion in 2014, with Ireland's deleveraging accounting for over a quarter of the total European market, beaten only by the UK. While it is expected that 2014 was the peak year, there is still a substantial amount of deleveraging to happen, so activity levels in 2015 are expected to remain high. Most of the loan buyers to date have been large private equity houses, such as Cerberus, Goldman Sachs, Lone Star, CarVal and Deutsche Bank. 

STRONG PROPERTY RETURNS IN 2014

IPD recorded total returns for 2014 of 40% across all property, above the 20-year average annual total return of 12.2% and above the total returns for the UK, which were 19.3%. The total return of 40% across all property was the highest total return recorded by IPD for Ireland since they started to measure performance in Ireland in 1973. The IPD total return by sector was 45% for Dublin offices, 35% for Dublin retail and 20% for industrial. Yield movement had a 21.1% impact on total returns while rental growth has started to gather momentum with a 19.7% impact. The all-property equivalent yield is down 190 bps from the end of 2013 and currently stands at 6.50%, which compares to 4.00% at the peak in Q4 2007.

Prime equivalent yields across the sectors have compressed in the period December 2013 to December 2014. Dublin prime office yields have reduced by 75 bps from 5.75% in December 2013 to 5.00% and are trending stronger. Dublin high street retail yields have reduced by 150 bps from 5.50% to 4.00% and are trending stable, while industrial has decreased by 75 bps from 8.00% to 7.25% and is trending stronger. Outside of Dublin there has been a 100 bps movement in offices in major provincial centres from 8.25% to 7.25%.

OCCUPIER MARKETS

Offices

Total take-up in Greater Dublin for 2014 reached a record level of 2.4 million square feet (225,000 square meters), 30% ahead of 2013 and 50% ahead of the long run average of 1.6 million square feet per annum (150,000 square meters). The TMT sector, financial services and professional services tenants accounted for over 68% of Dublin take-up, as follows:

The largest transactions in 2014 included lettings of over 120,000 square feet (11,100 square meters) in a pre-letting to Arthur Cox Solicitors and 127,600 square feet (11,800 square meters) to Facebook (in addition to their existing 122,800 square feet (11,400 square meters), and lettings of between 50,000-100,000 square feet (4,645 and 9,290 square meters) to Workday, Yahoo, Amazon, Dropbox and the Office of Public Works (Irish Government).

With this heightened level of activity vacancy rates continued to fall. In Greater Dublin the overall vacancy rate reduced from 15% (Q4 2013) to 11.8% by Q4 2014. In Dublin 2 (CBD) the overall vacancy rate now stands at 7.3%, with the Dublin 2 Grade A vacancy rate quoted as being between 2-3%. There continues to be a consistent level of demand and the main concern for tenants looking ahead is the eroding supply of Grade A accommodation in Dublin city centre.

With regard to the supply of new office stock in Dublin city centre we are starting to see sites selling and planning applications being submitted, but the current development pipeline is negligible in the context of the total Dublin office market, where no more than 1 per cent of new stock will be added by the end of 2016. A summary of the schemes underway at present is as follows:

It is estimated that the majority of these schemes will be completed between H2 2016 and the end of 2017. With this in mind, in our view growth in Dublin office rental values looks set to continue through 2015.

Looking at the supply of new offices in Dublin city centre beyond 2017, planning permission has been granted for a further 2.65 million square feet (247,000 square meters) and planning applications have been submitted for an additional 1.3 million square feet (121,000 square meters) in Greater Dublin . There is no visibility at this point when construction on those sites with planning will commence and whether there is construction finance in place. Realistically we would expect 2018 and 2019 to be the years in which we will see a meaningful supply of new office stock. The Strategic Development Zone ('SDZ') for the north and south docks is likely to play an important part here. The market expectation is that the schemes involved here will take between 5 and 7 years to be developed, although in our view it is likely to take longer due to the current lack of development finance for speculative development. In addition, approximately 75 per cent of the sites are in NAMA's control so we would expect a phased and coordinated approach to development here.

At the end of 2013, prime Grade A Dublin office rents had reached €35 per square foot ( €377 per square meter) and over the course of 2014 we have seen a 28% increase, with prime headline rents now at €45 per square foot ( €484 per square meter). 

Retail

The Irish economy has continued to strengthen in the second half of 2014. GDP grew by 5% in 2014, the strongest growth in the Eurozone. The unemployment rate fell to 10.6% in December 2014 compared to 12.4% in December 2013 and compared to a peak unemployment rate of 15.1 per cent in February 2012. Unemployment is expected to reach 9.6 per cent in 2015 before falling to 8.8 per cent in 2016. Retailers reported stronger trading over the Christmas period, with volumes up by 1.9% (excluding cars) in December when compared to November. For 2014 as a whole retail sales were up by 5.1% and 4.8% if cars are excluded. With fuel prices having reduced dramatically in Q4 2014, and with the expectation that they will remain depressed for some time to come, the expectation is that retail sales will benefit as a result of the higher disposable income effect of these reduced prices. On the consumer sentiment front, Irish consumer sentiment hit a nine-year high in January 2015.

New entrants to the Irish retail market in 2014 included Cos, Nespresso, Michael Kors, Mango, Molton Brown, iConnect and Parfois. Tenant demand remains focused on the best trading locations of Dublin city centre and other centres with a larger catchment, the best shopping centres and retail parks. We may see this tenant demand ripple a little further towards secondary locations in 2015 as improvements in the economy take hold. Vacancy in prime locations is limited, particularly Dublin high streets, offering the prospect of some upward pressure on rents for the year ahead.

Development of new retail remains constrained, with no proposals for any new centres in the pipeline, so the addition of new space is likely to be limited to extensions to existing schemes. In 2015, extensions are proposed for Kildare Outlet Village, 70,000 square feet (6,500 square meters), Liffey Valley Shopping Centre, 100,000 square feet (9,290 square meters), The Square in Tallaght has existing consent for 200,000 square feet (18,580 square meters) though they may not break ground this year, while Merchant's Quay in Cork is scheduled to be redeveloped in the next 12 months.

Industrial

After a strong level of activity in 2013, take up in 2014 was comparable to the peak in 2007 at 3.49 million square feet (325,000 square meters). Of the 175 transactions recorded, 76% were sales of industrial units and 24% were lettings.

Demand for space remains steady and while new requirements tend to seek prime accommodation, 70% of actual take up in 2014 was secondary space, mostly as a result of the shortage of modern options. Prime industrial rents remained stable during the year and currently stand at €6 per square foot (€67 per square meter). While there is a need for the delivery of modern new space, at these rental levels, development remains unviable.

Sources:

(1) CBRE Outlook presentation & report January 2015

(2) CBRE Research Department

(3) JLL Investment market report Q4 2014

(4) European Real Estate Loan Sales Market, Cushman & Wakefield

(5) IPD/SCSI Quarterly Briefing Q4, Ireland 29th January 2015

(6) JLL Dublin Industrial Market Report Q4, 2014

(7) Central Statistics Office, Ireland

(8) Goodbody Commercial Property Sector Outlook 2015

(9) DTZ Outlook 2015

Portfolio Overview at 31 December 2014

§ 24 properties acquired by 31 December 2014, valued at €882 million at that date

§ Valuation uplift of 12.5% on properties held at 30 June 2014

§ Valuation uplift of 7.8% on properties acquired in October 2014 (Sapphire and Dawson Street)

§ Total floor area of 2.3 million square feet (210,000 square metres)

§ 94% portfolio occupancy rate

§ Total passing rents of €53.0 million per annum (€54.5 million on expiry of rent frees)

§ 145 tenants

§ Portfolio weighted average unexpired lease term of 5.3 years (to earlier of lease break and expiry)

§ Yields:

§ 95% of assets by value located in Dublin

§ Sectoral Split by value at 31 December 2014: Office 74%, Retail 20%, Industrial 1%, Other 5%

§ Development opportunities on 3 Dublin city centre office properties, 7.4 acres for offices at Central Park in South Dublin and 112 acres of land for industrial at Dublin Airport.

Appendix 1: Further Portfolio Information at 31 December 2014

RENTAL INCOME

*Includes vacant space to give portfolio position

LEASE LENGTHS & VACANCY

*Excluding residential component in Arena Centre

CONTRACTED RENTS VERSUS ESTIMATED MARKET RENTS (ERVs) *

*Let only properties. Excluding car space rent (where applicable)

**Excluding Parnell Car Park and residential components ("Other") to give portfolio position

http://www.rns-pdf.londonstockexchange.com/rns/6431F_-2015-2-23.pdf 

TOP 10 OCCUPIERS BY PASSING RENT

*Excluding residential component in Arena Centre

Principal Risks and Uncertainties

The following are the principal risks that the Board has identified for the coming year and the measures that will mitigate these risks:

STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE CONSOLIDATED FINANCIAL STATEMENTS

Statement of Directors' Responsibilities

The Directors confirm to the best of their knowledge that the 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 the Disclosure and Transparency Rules of the UK Financial Conduct Authority and with IAS 34 Interim Financial Reporting, as adopted by the EU, and to the best of their knowledge and belief:

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

· 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 2014 to 31 December 2014 and their impact on the condensed interim 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 2014 to 31 December 2014 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 Stephen Vernon 23 February 2015

Chairman Director

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF GREEN REIT PLC

Introduction

We have been engaged by the Company to review the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 31 December 2014, which comprises the Group statement of comprehensive income, the Group statement of financial position, the Group statement of changes in equity, Group statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements.

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Transparency (Directive 2004/109/EC) Regulations 2007 as amended ("the TD Regulations"), the Transparency Rules of the Central Bank of Ireland and the Disclosure and Transparency Rules of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the TD Regulations, the Transparency Rules of the Central Bank of Ireland and The Disclosures and Transparency Rules of the UK FCA.

The annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The directors are responsible for ensuring that the condensed set of consolidated financial statements of the Group are prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the set of condensed set of consolidated financial statements in the half-yearly financial report based on our review.

Scope of review

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. 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 (UK and 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. 

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF GREEN REIT PLC

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 31 December 2014 is not prepared, in all material respects, in accordance with IAS 34 and consequently IFRSs as adopted by the EU, the TD Regulations and the Transparency Rules of the Central Bank of Ireland and the Disclosure and Transparency Rules of the UK FCA.

KPMG

Chartered Accountants, Statutory Audit Firm

Dublin, Ireland

23 February 2015

*The comparative period is from 24 June 2013 to 31 December 2013

Unaudited condensed consolidated statement of cash flows

for the six month period to 31 December 2014

The accompanying notes are an integral part of these financial statements

Notes to the condensed consolidated financial statements

1. Reporting entity

Green REIT plc (the 'Company') is a Company incorporated and resident in Ireland. The address of the Company's registered office is Styne House, Hatch Street Upper, 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 financial statements as at and for the six months ended 31 December 2014 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 financial statements, which should be read in conjunction with the Annual Report for the period ended 30 June 2014, 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 condensed financial information herein does not constitute the statutory financial statements of Green REIT plc, which were prepared as at and for the period ended 30 June 2014, were approved by the Board of Directors on 28 October 2014 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 2015.

The preparation of the condensed interim 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 condensed consolidated interim financial information for the six months ended 31 December 2014 has been prepared on a going concern basis. In order to satisfy themselves that the Group has adequate resources to continue in operational existence for the foreseeable future, the Directors have reviewed an 18 month forecast for the Group, which includes assumptions about future trading performance and debt requirements. This, together with available market information and experience of the Group's property portfolio and markets, has given the Directors sufficient confidence to adopt the going concern basis in preparing the financial statements.

3. Significant accounting policies

The accounting policies significant judgements, key assumptions and estimates applied by the Group in these condensed interim financial statements are consistent with those applied in the 2014 Annual Report, except the additional policies adopted due to changes in the business during the period, as follows:

Share based payments

Share based payments - performance fee

The performance fee arrangement between the Company and the Investment Manager is accounted for as an equity settled share based payment arrangement. The grant date is 1 July and on that date, the Company estimates the grant date fair value of each equity instrument and the number of equity instruments for which the service and non-market performance conditions are expected to be satisfied, resulting in the initial estimate of the total share based payment cost which is expensed over the vesting period. Subsequent to initial recognition and measurement, the estimate of the number of equity instruments for which the service and non-market performance conditions are expected to be satisfied is revised during the vesting period, that is, the period from 1 July to 30 June. Ultimately, the share based payment cost is based on the fair value of the number of equity instruments issued upon satisfaction of these conditions.

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 financial statements. We are currently assessing the full impact of these amendments on the Group.

4. Operating segments

The Group, including the Central Park Joint Venture is organised into four business segments, against which the Group reports its segmental information, being Retail Assets, Office Assets, Industrial Assets and Other Assets (properties that do not fall into the preceding classifications). 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. For the purpose of segmental analysis the Central Park Joint Venture is presented on a proportional consolidation basis, in comparison to the equity accounted presentation in the financial statements.

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

The Group's key measures of underlying 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 below:

(i) Includes hotel and car park assets

*Total cash and cash equivalents and short term deposits at 31 December 2014 is €27.3m (30 June 2014: €370.9 million). The total segment assets per the unallocated segment above is €14.0 million (30 June 2014: €403.1 million) and primarily represents cash and cash equivalents and short term investments. The difference primarily represents deposits paid on properties contracted for at 30 June 2014.

** Reconciliation of the Group's segmental reporting analysis to the consolidated financial statements. For the purposes of our segmental reporting the Central Park Joint Venture is included on a proportional consolidation basis. The statutory reporting presents the Joint Venture using the equity method.

(i) Includes hotel and car park assets

5. Gross and net rental and related income

6. Net movement on fair value of investment properties

7. Taxation

As disclosed in the 2014 annual report, Green REIT plc elected for REIT status with effect from 18 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.

8. Investment property

The total consideration before acquisition expenses of the properties acquired up to 31 December 2014 was €398.5 million and the total costs of acquisition which comprised of stamp duty payable at an average rate of 2%, legal services and other directly attributable costs arising from the transactions amounted to €11.2 million, resulting in total capitalised costs of €409.7 million to the Group on acquisition.

The fair value of the Group's investment property at 31 December 2014 has been arrived at on the basis of valuations carried out at that date by external valuers; CBRE Ireland (CBRE) and Jones Lang LaSalle Ireland (JLL). The valuations performed by CBRE 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.

The Board, after discussions between the Audit Committee and the Group's external valuers, ultimately decides whether a property's fair value has been reliably determined.

At 31 December 2014, the Group considers that an income approach / yield methodology using market rental values capitalised with a market capitalisation rate or yield used by the valuers is the best method to determine the fair value of the investment properties. As outlined in IFRS 13, a Level 3 fair value recognises that not all of the inputs and considerations made in determining the fair value of property investments can be derived from publicly available data, as the valuation methodology in respect of a property has also to rely on other factors including technical engineering reports, legal data and analysis, and proprietary data bases maintained by the valuers in respect of similar properties to the assets being valued. Therefore, the Group considers that all of its investment properties fall within Level 3 fair value as defined by IFRS 13.

In the determination of the fair value of investment properties, the current use of the properties is their highest and best use. Quantitative information about fair value measurements using unobservable inputs (level 3), per property class are as follows:

(i) Includes the Central Park office portfolio, which is accounted for as a joint venture.

(ii) There is only one asset in this asset class and therefore there is no range information provided.

(iii) Includes hotel and car park assets.

Sensitivity of measurement to variance of significant unobservable inputs

A decrease in the estimated rental value ("ERV") will decrease the fair value. Similarly, an increase in the 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 properties, a 1% increase in equivalent yield would have the impact of a €89.3 million reduction in fair value whilst a 1% decrease in yield would result in a fair value increase of €114.9 million. This is further analysed by property class, as follows:

(i) Includes the Central Park office portfolio, which is accounted for as a joint venture

9. Investment in joint venture

The Group, through its wholly owned subsidiary Green REIT (Central Park) Limited is a 50% partner in the Central Park Limited Partnership, a joint arrangement formed on 28 March 2014 with LVS II CP Investor Ltd.

The Group's 50% share of the Central Park Limited Partnership properties were externally valued by JLL at 31 December 2014 on the basis more fully outlined in note 8 to these financial statements.

During the period, the Group provided €1.0m further funding to the Partnership and received a distribution of €2.0 million.

The Group has classified this joint arrangement as a joint venture, as both parties have joint control of the arrangement. The detailed breakdown of the Group's 50% interest in the Central Park Limited Partnership joint venture is set out below:

(i) Summarised income statement for six months to 31 December 2014

31 December 2014

(ii) Summarised balance sheet