GRN.L Regulatory News (GRN)

INTERIM RESULTS TO 31 DECEMBER 2015

INVESTMENT STRATEGY CONTINUES TO DELIVER

GOOD NAV GROWTH OF 7% IN THE 6 MONTH PERIOD TO €1.41 PER SHARE 

Dublin & London, 22 February, 2016 - Green REIT plc, ("Green REIT" or the "Company"), the Irish property investment company, announces its results for the 6 months to 31 December 2015 and provides an update on activity since year end, the highlights of which are as follows:

Financials - strong performance in the period, reflecting successful investment strategy implementation against a favourable market backdrop

§ 7% increase in EPRA Net Assets to €961.5 million in the 6 months to 31 December 2015

§ 19% increase in EPRA Net Assets in the 12 months to 31 December 2015

§ Profit of €67.1 million for the 6 months to 31 December 2015 (31 December 2014: €74.3 million)

§ Total EPS of 10 cents for the period (31 December 2014: 11.1 cents)

§ EPRA EPS of 1.9 cents for the period (31 December 2014: 1.2 cents)

Development Programme - now on site at four locations in Dublin at early stages of development cycle, expected to be a significant driver of shareholder returns

§ Three new starts in the period (One Molesworth Street, 32 Molesworth Street and Horizon Logistics Park)

§ Block H in Central Park (150,000 sq ft) progressing well and on target for completion in late 2016

§ Expect to commence on site at 4-5 Harcourt Road, Dublin 2, in mid-2016

Asset Management - successful active asset management delivering increased and more secure income over the longer term

§ Since 1 July 2015, lease renegotiations completed/agreed on €14.7 million, or 23% of total annual contracted rent, including leases with Pioneer Investments (3.4 million annual rent) and Vodafone Ireland (€7.3 million annual rent), the latter of which is expected to complete in late February 2016

§ €5.8 million of new annual rent secured through new lettings, the largest of which is to Fidelity International in George's Quay (€3.5 million per annum)

§ 46% increase in total WAULT, from 5 years at 30 June 2015 to 7.3 years currently

§ EPRA vacancy of 1% at 31 December 2015 (31 December 2014: 6%)

Strong Balance Sheet - underpins ability to continue to deliver risk adjusted returns

§ Total gearing of 9.6% at 31 December 2015, which increased to 22.2% post year end with the Central Park and One Albert Quay acquisitions

§ €47 million cash at 31 December 2015 (€38 million at 31 December 2014)

§ €134 million drawn of Barclays facility initial limit of €150 million now drawn, with flexibility to increase this limit

Capital Recycling - acquisitions and disposals undertaken where supportive of investment strategy

§ Completed the acquisition of full control of Central Park in January 2016, having contracted in November 2015

§ Completed the acquisition of One Albert Quay in Cork, making the first stage payment of €22.2 million, with a further €30.4 million to be paid in the year to February 2017

§ Strategic sale of six assets (the 'Glas Collection') announced in February 2016, as part of target to achieve a stabilised total gearing level of 25%

Gary Kennedy, Chairman of Green REIT plc, commented:

"The execution of our investment strategy continues to deliver shareholder returns. The Company has secure income, prime assets, a strong balance sheet and a proven management team. The Board is confident that the continued implementation of our asset management and development strategy, against the favourable backdrop of a strong commercial property market and supportive Irish macroeconomic fundamentals, will deliver further shareholder returns in line with our target. We look forward to the year ahead with confidence."

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

"The Irish commercial real estate market continues to be supported by the growth in the Irish economy, and in particular foreign direct investment which, despite the global headwinds, has remained very resilient. Our focus in Green REIT continues to be on the active management of our €1 billion investment portfolio, where we have 99% occupancy, and the development of our five projects in Dublin, where we expect to add to our very strong list of existing tenants."

ENDS

A conference call for investors and analysts will be held at 09.30 GMT (04.30 ET) and those wishing to dial in should contact FTI Consulting on the details below.

Contacts

FTI Consulting (IR and PR to the Company)

Dublin London

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

Jonathan Neilan Claire Turvey

Melanie Farrell Giles Barrie

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 period since 1 July 2015 was one of further sustained activity for the Company. We have had continued success in implementing the Company's investment strategy, where the primary focus is on the following four main areas:

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

2. Advancing the redevelopment opportunities in the five assets/sites identified;

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

4. Disposing of a number of assets in 2016 in order to stay within our intended total gearing level of 25%.

The heightened level of activity in the period from 1 July 2015 to date included the completion of two acquisitions, the launch of the sale of six properties in the 'Glas Collection', the signing of leases with new tenants, renegotiating leases with some of our largest tenants and starting on site on three further development projects, namely 32 Molesworth Street, One Molesworth Street and Horizon Logistics Park. Now that we are in the midst of the execution stage of our investment strategy, we are focused primarily on growing organically, through a moderate level of property development and through growing and extending the duration of income across our portfolio.

Ireland - Favourable Macroeconomic Backdrop

Irish macroeconomic fundamentals continue to strengthen. Ireland was the fastest growing economy in the EU in 2014 and 2015, and it is expected that this will continue into 2016. While export growth is still strong, the domestic economy is now playing a bigger part in the economic recovery. The country's unemployment rate has been declining steadily and at 8.6 per cent at the end of January 2016, down from 10.1 per cent in January 2015, is now below the EU average. The country's debt to GDP ratio has reduced markedly and is forecast to be below the EU average by the end of 2016, ahead of expectations and targets.

Acquisitions and Disposals

The highlight of the period from 1 July 2015 to date was the acquisition of full control in Central Park, stepping up our ownership there from 50 to 100 per cent, which was contracted in November 2015 and completed in early January 2016. The other acquisition completed in the period was of One Albert Quay in Cork city centre. This grade A office building is a great addition both to Cork city and our portfolio.

Having informed shareholders in November 2015 of our intention to sell a number of assets in 2016 as part of our strategy to achieve our intended total gearing level of 25 per cent, on 3 February 2016 we announced that six of the Company's properties would be marketed for sale.

Asset Management

On the asset management front the highlights of the period were the renegotiation of existing leases with Pioneer Investments (complete) and Vodafone Ireland (terms agreed, expected to complete late February 2016), which along with other asset management initiatives have increased our rent weighted average unexpired lease term ('WAULT') by 2.3 years from 5 years at 30 June 2015 to 7.3 years currently. We also entered into new leases with Fidelity International comprising an annual rent of €3.5 million and with a term certain of 12 years.

Development

Having commenced construction of Block H in Central Park in April 2015, our development programme ramped up substantially in the period, wherein we started two further office schemes at 32 Molesworth Street and One Molesworth Street, both in Dublin City Centre, and two industrial units on our lands at Horizon Logistics Park at Dublin Airport. We are excited to be delivering these buildings into the market in the early stages of the Dublin development cycle and expect that they, along with the redevelopment of 4-5 Harcourt Road, will be a significant driver of shareholder returns.

Driving Risk Adjusted Returns

As was highlighted in our Annual Report 2015, our focus is on driving risk adjusted returns for shareholders, with a moderate level of property development and with an intended total gearing level of 25 per cent. Our total gearing level of 9.6 per cent at 31 December 2015 has increased to 22.2 per cent following the acquisition of full control of Central Park and the first stage payment made in respect of One Albert Quay in Cork. We have further capital to deploy to fund our development projects and the balance of the One Albert Quay payments, while using selective disposals to stabilise the total gearing level at 25 per cent.

Financial Results and Position

Summary Financial Information

 1 Includes the 50% interest in the Central Park properties of €166 million at 31 December 2015 and €151 million at 30 June 2015

Net Asset Value ('NAV')

The key drivers of the increase in the Company's NAV by €62.2 million, or by 7%, between 1 July 2015 and 31 December 2015, were as follows:

(i) a rental profit for the period of €12.5 million (31 December 2014: €7.9 million);

(ii) a net movement in fair values (including JV property) by €54.6 million (31 December 2014: €66.4 million);

(iii) a provision for performance fee of €5.8 million (31 December 2014: €5.0 million);

(iv) less the payment of dividends in the period of €10.7 million, in respect of the year to 30 June 2015 (31 December 2014: nil).

Outlook

Our investment strategy is clear and continues to deliver. The Board recognises that, alongside our investment strategy, sustained Irish economic prosperity and a continuation of the favourable macroeconomic backdrop are important in the context of delivering shareholder returns.

Ireland, as an open economy, is subject to a range of economic and political risks which have the potential to affect our ability to deliver these returns successfully. Notwithstanding these considerations, the Company has secure income, prime assets, a strong balance sheet and a proven management team.

The Board is confident that the continued implementation of our asset management and development strategy, against the favourable backdrop of a strong commercial property market and supportive Irish macroeconomic fundamentals, will deliver further shareholder returns in line with our target.

We look forward to the year ahead with confidence.

Gary Kennedy

Chairman

21 February 2016

Investment Manager's Report

The real estate sector in Ireland has recovered rapidly following the global financial crisis, with record take-up levels in Dublin offices in 2015 and a strong pipeline of FDI tenants looking to grow in Ireland or to enter the Irish market in 2016. There is also good demand from domestic companies for space. The investment market remains healthy, assisted by the fact that bond yields and interest rates are at historical lows, driven mainly by the uncertainty around global growth and low oil prices.

As set out in the Company's Annual Report 2015, our focus continues to be on driving risk adjusted returns through the execution of our asset management and development strategies across the portfolio, while remaining opportunistic with regard to further acquisitions.

ACQUISITIONS

Central Park - full control

The highlight of the period since 1 July 2015 was the acquisition of full control of Central Park, widely acknowledged as Dublin's best office park, increasing the Company's ownership from 50 per cent to 100 per cent. This acquisition, contracted in November 2015 and completed in January 2016, will add €9 million to the Company's annual contracted rent, and its impact on earnings and NAV will be reflected in the Company's results to 30 June 2016.

One Albert Quay, Cork

In February 2016 we also completed the acquisition of One Albert Quay in Cork, a newly built office block of 164,000 square feet (15,236 square metres), which was contracted in May 2015. We made an initial payment of €22.2 million in February 2016 following practical completion of the building, where there are now leases signed or in legals covering €2.9 million of annual rent, representing 70 per cent of the ERV of the building. We will make further payments of €30.4 million in respect of the balance of the building over the period to February 2017.

DISPOSALS

We informed shareholders in November 2015 of our intention, on the back of the acquisition of full control of Central Park, to sell a number of assets in 2016 in order to achieve our intended total gearing level of 25 per cent. Subsequently, on 3 February 2016 we confirmed that we had appointed JLL to sell a portfolio of the Company's properties, "The Glas Collection", by private treaty on our behalf. The Collection comprises six properties, four of which are in Dublin and include the mixed use Arena Centre in Tallaght, Ormond Building in Dublin city centre, Classon House in Dublin 14 and Parnell Car Park in Dublin 1. The other two assets are Globe Retail Park in Naas and Parkway Retail Park in Limerick.

The Glas Collection comprises over 69,677 sq m (750,000 sq ft), with a total passing rent of approximately €11.5 million per annum. The total guide price is in excess of €168.7 million, which equates to an initial yield of approximately 6.6 per cent.

ASSET MANAGEMENT

We continue to grow our rental income and to enhance the security of that income through driving the WAULT higher on a case-by-case basis.

Highlights in the period since 1 July 2015 include the following:

Lease Re-gears

We completed or agreed lease renegotiations on €14.7 million, or 23 per cent of our current contracted annual rent, significantly increasing the WAULT on this income from 2.7 to 9.7 years. This includes our now single largest tenant, Vodafone (terms agreed, expected to complete late February 2016), our fifth largest tenant Pioneer, the OPW (Irish government) and Bank of Ireland. Summary details are as follows:

* Total annual contracted rent at February 2016

** Assumes that Vodafone lease renegotiation has completed, which is expected by late February 2016

New Lettings

We secured new lettings with €5.8 million per annum in new contracted rent, which represents 9 per cent of the group's current contracted annual rent. The WAULT on these new leases is 9.3 years.

The largest of these is with Fidelity International at George's Quay. The Fidelity leases extend to 68,000 square feet (5,852 square metres) in total, which Fidelity will fully occupy by late 2016 when Twitter and Invesco vacate the space they currently occupy. The annual contracted rent from Fidelity is €3.5 million, on 25 year leases at a rent of €49 per square foot (€527 per square metre), with a break clause in the tenant's favour on the twelfth anniversary of the leases.

These new lettings were 6 per cent ahead of 30 June 2015 rental values (excluding short term lettings).

WAULT

§ The combined effect on WAULT of the lease renegotiations and new leases completed in the period is to increase our overall WAULT by 46 per cent from 5 years at 30 June 2015 to 7.3 years currently;

§ As at 30 June 2015, 53 per cent of our contracted annual rent had a break option or lease expiry in the years 2016 to 2018. This has now been reduced to 25 per cent;

§ 75 per cent of our contracted annual rent is now subject to a break or expiry beyond 2019, which has increased from 42 per cent at 30 June 2015;

§ Lease re-gear/renewal discussions will continue to be activated on a case by case basis on the remainder of the portfolio.

Vacancy

As at 31 December 2015 there was 1 per cent vacancy across the portfolio by ERV (31 December 2014: 6%).

DEVELOPMENT PROJECTS

One of the key tenets of our investment strategy is to create value for shareholders through a prudent level of property development. We acquired five properties with development potential at early points in the Dublin real estate development cycle, with a view to obtaining the necessary planning consents and delivering new buildings into what is a very constrained Dublin office market; and in the case of our industrial development, into a market devoid of supply of modern high bay logistics units in well-located parts of Dublin.

Having started on site at Block H in Central Park in April 2015, in the period since 1 July 2015 we started on site at three further locations, namely 32 Molesworth Street, Horizon Logistics Park and One Molesworth Street. A brief summary of these schemes is as follows:

Development costs are being funded using the revolving credit facility that the Company has with Barclays Bank Ireland plc. 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 2015 to the previous valuations at 30 June 2015 and 31 December 2014, the position as follows:

Note:

Financial Review

Rental Income

The six month period to 31 December 2015 saw an increase of 50 per cent year-on-year in our gross rental income (excluding service charge income) from our 100 per cent owned properties, growing from €16.1 million to €24.2 million. Net rental income for the period from our 100 per cent owned properties was €22.9 million (31 December 2014: €15.1 million), with property operating expenses of €1.3 million in the period (31 December 2014: €1.0 million). The increase in property operating expenses was due primarily to an increased level of leasing activity, with increased agents and legal fees related to new leases and lease renegotiations.

Investment Manager Fees

The increased base fee charge of €4.7 million in the period (2014: €3.8 million) reflects the increased NAV of the Company on which the one per cent annual base fee is calculated. In the year from 31 December 2014 to 31 December 2015 NAV has increased from €807.1 million to €961.5 million. The details of the performance fee provision for the period (€5.8 million) are set out in further detail in note 18 of these results.

Earnings per Share ('EPS')

EPRA EPS, which measures EPS on rental profit only, increased by 0.7 cent per share or by 58 per cent from 1.2 cents to 1.9 cents. EPRA EPS accounted for 19 per cent of total EPS of 10.0 cents in the six months to 31 December 2014, while it accounted for just 11 per cent of total EPS of 11.1 cents in the same period in 2014.

This is a reflection firstly of our increased rental income in the current period, which is 50 per cent greater than the same period in 2014, and secondly of the evolution of the Irish commercial real estate market from 'recovery' or 'opportunistic' mode in 2014 to a mode of more sustainable and moderate growth in 2015. This is illustrated by the total returns from Irish commercial real estate as measured by IPD/MSCI, which decreased from 40 per cent for 2014 to 25 per cent for 2015.

A reconciliation of total profit and EPS to EPRA Profit and EPRA EPS is as follows:

Net Asset Value ('NAV')

Our EPRA NAV increased by 7 per cent in the six months to 31 December 2015, from €899 million to €962 million. Comparing EPRA Net Assets at 31 December 2015 to 31 December 2014 the increase year on year was 19 per cent.

The main drivers of EPRA NAV in the six months to 31 December 2015 were our rental profit, the fair value increases in our properties and a reduction caused by the payment in October 2015 of the dividends for the year to 30 June 2015.

Please see Appendix 1 for further EPRA Performance Measures.

Gearing

As indicated in our Annual Report 2015, our intended level of total gearing is 25 per cent.

As at 31 December 2015 our total gearing level was 9.6 per cent, up very marginally on 9.5 per cent at 30 June 2015. When the effect of our acquisition of full control of Central Park in January 2016 and the first payment on One Albert Quay in Cork in February 2016 are taken into account, our total gearing is currently 22.2 per cent, summarised as follows:

OUTLOOK

Having witnessed historically high total returns from Irish commercial real estate of 40 per cent in 2014 and 25 per cent in 2015, returns are likely to revert to more sustainable levels for 2016 and beyond. Rental growth is now the more important driver of performance as opposed to yield contraction, which has dominated to date in the recovery cycle.

The Irish economy is performing well on all key indicators, with growth well ahead of the EU average in the last two years, which is expected to be the case again in 2016. The occupier market is consequently very healthy, with concerns about future Dublin office over-supply abating somewhat, particularly with NAMA unlikely to be involved in mass speculative development in Dublin's Docklands projects. With regard to the investment market, we continue to see core capital flow to Ireland for prime assets, with the early cycle investors being the main sellers.

While Ireland is performing strongly relative to other economies in Europe, and is benefitting from the prevailing low interest rate environment and relatively weak Euro, there is considerable global uncertainty at present around growth in China, oil prices and equity market volatility. We recognise that these external factors could adversely impact on the Irish economy and real estate sector. We believe however that the strength and security of our income, the quality of our tenants and our assets and the strength of our balance sheet put the Company in a strong position to continue to deliver shareholder returns in this environment of sustained economic growth in Ireland amid uncertainty elsewhere.

Stephen Vernon Pat Gunne

Executive Chairman Chief Executive

21 February, 2016

Irish Property Market Overview

Economic Overview

The Irish economy continues to perform well, with key economic indicators as follows:

§ For the second year running Ireland is likely to have been the fastest growing economy in Europe in 2015, with GDP growth for 2015 expected to be 7%. The forecasts for 2016 are for GDP growth of 4.8%;

§ The unemployment rate currently stood at 8.6% at the end of January 2016, down from 10.6% at December 2014, and down from a peak of 15.2% in February 2012. It is expected to fall to 8% by the end of 2016;

§ FDI job growth was 6.8% in 2015, with 187,000 people now employed by multinational companies in Ireland, the highest figure on record;

§ A balanced national budget, or close to it, is expected to be achieved in 2016 (0.3% of GDP deficit is forecast), and this is expected to reach a surplus (0.9% of GDP is forecast-) by 2019, well ahead of expectations;

§ The country's debt to GDP ratio has reduced markedly and is forecast to be below the EU average by the end of 2016, ahead of expectations and targets;

§ Retail sales grew by 8.5% in the year to December 2015 and are forecast to grow by an average of 2.1% per annum between 2016 and 2018;

§ The consumer confidence index rose to 103.9 at the end of 2015, compared to 90.5 at the end of 2014. These levels were last seen in 2006;

§ Irish export growth continued in 2015, aided by a weakened Euro, with growth in goods exports of 21.2%, with goods exports to the US and the UK up 28.7% and 13.2% respectively in the year. Goods exports to Eurozone countries also performed well, increasing by 20.7% over 2014 levels.

A general election in Ireland has been called for 26 February 2016, and the expectation is that the result could lead to a fragmented government, which would have a negative impact on political stability. Also of concern is the Brexit referendum in the UK, where most commentators are viewing a British exit from the EU as potentially having a negative impact on the Irish economy, although with a number of variables at play the actual impact of any result is difficult to forecast.

Investment

Total direct investment in commercial real estate in Ireland reached €3.5 billion in 2015, down from the record €4.6 billion achieved in 2014, but still well ahead of the previous high of €3 billion in 2006. In addition, there was a further €7 billion of loan sale activity backed by real estate.

Offices still dominated demand and accounted for 48% of transactions in 2015, followed by retail at 29% and mixed use portfolios at 16%. The USA accounted for the largest buyer group, with 41% of the market, while domestic buyers accounted for 40%, UK/Europe for 13.3%, and the remainder came from the Middle East and undisclosed locations. The Irish REITS accounted for 7% of the total capital invested, down from 30% in 2014, as a result of having deployed much of their available capital by the end of 2014.

Property Returns in 2015

The MSCI index (formerly known as IPD) recorded total returns for 2015 of 25% across all property in Ireland, down from 40% in 2014 but still ahead of all other global markets that they track. In the same period, the UK market recorded total returns of 13.8%. There are various components of total return and rental growth now accounts for 14.4% with yield compression accounting for 7.2%. The IPD total return by sector in Q4 shows retail as the top performer with total returns of 7%, 5.6% for offices and 5.7% for industrial. The all-property equivalent yield is down 70 bps from the end of 2014 and currently stands at 5.8%.

There has been further yield compression, albeit at a slower pace, in prime equivalent yields. In December 2014 prime office yields were at 5.00% and today stand at 4.50%. Dublin high street retail yields were 4.00% in the same period and now stand at 3.25%, while industrial yields were 7.25% and are now at 5.75%. Outside of Dublin, offices in major provincial centres were 7.25% in December 2014 and now stand at 7.00%.

Occupier Markets

Offices

Total take-up in Greater Dublin for 2015 broke the record of 2014 (+11.6%) and reached 2.68 million square feet (249,000 square metres) in gross terms. This compares to the 15 year average annual take-up of 1.84 million square feet (171,177 square metres).

The city centre accounted for 71% of the take-up and almost half of the remainder was accounted for by the south suburbs. Take-up by sector in 2015 was as follows:

City Centre

South Suburbs

The overall vacancy rate now stands at 8.7%, with the vacancy rate in Dublin 2 and Dublin 4 at 6.8% and the Grade A vacancy rate is at 3.3%. In the South Suburbs the overall vacancy rate is 6.1%.

There is currently approximately 3.4 million square feet (319,000 square metres) under construction in Dublin city centre over 26 schemes, between new builds and refurbishment projects, with delivery to take place between 2016 and 2018. Of these, 28.5% by area has been pre-let. At the time of our Annual Report (September 2015) there were 19 schemes under construction in Dublin city centre, extending to approximately 1.96 million square feet (182,623 square metres), of which 38% had been pre-let.

In the suburbs, Block H Central Park is the only speculative scheme currently under construction, which is 150,000 square feet (13,935 square metres) and due for completion at the end of 2016.

Prime quoting Dublin city centre office rents grew by 22% in 2015 and today stand at €55 per square foot (€592 per square metre) in the city centre and €27.50 per square foot (€296 per square metre) in the south suburbs. With the continued strength in tenant demand and limited new completions in 2016, market commentators are suggesting there will be further rental growth during 2016 of potentially 18%, bringing headline rent to approximately €65 per square foot (€699 per square metre) by year end.

Cork Office Market

The lack of new development is hampering activity in the Cork office market. Take-up in 2015 reached 237,800 square feet (22,093 square metres) which is down 22% on levels achieved in 2014. Tenant demand remains strong and restricted only by the limited availability of modern Grade A accommodation. The top lettings in 2015 were all at One Albert Quay and include Tyco Ireland Limited, Arup, PWC, Malwarebytes and Ardmore Shipping. Other lettings include Brookfield Renewal Ltd at City Quarter, Lapps Quay, SMC at Eastgate Business Park in Cork and Globe Tech at Cork Airport Business Park.

Current headline rental levels being achieved are €25 per square foot (€269 per square metre), with commentators suggesting that rents are likely to increase over the next 2-3 years to €30 per square foot (€322 per square metre). The overall vacancy rate in Cork peaked at 23.9% in 2012 and currently stands at 15.6%. It is expected to fall further during the course of this year. While there is no official Grade A vacancy rate, our understanding is that most vacant stock is of Grade B quality or poorer.

There are no new schemes currently under construction in Cork and only one scheme at the Capital Cinema site likely to commence this year. This is mixed use incorporating office and retail and extends to approximately 70,000 square feet (6,500 square metres).

Retail

As detailed above, retail sales are up and consumer confidence is back to levels last seen in 2006. In addition, exchequer returns show that VAT and excise receipts were +7.1% and +6% year-on-year respectively in 2015. There has been some commentary that footfall figures in major retail centres are up and there has been a continued reduction in vacancy rates. There is evidence of rental growth in Dublin city centre prime high street locations, where rents grew by 10% in the last twelve months. It is suggested that we may see rental growth in 2016 for the better high street and shopping centre/out of town locations as tenant demand continues to grow.

That said, many retail centres are still very over-rented and it may take some time for market rents to catch up with underlying rents. The MSCI index records approximately 45% of the retail income from its basket of assets as currently over-rented.

On the capital side, ownerships are transitioning. We have seen continued demand for prime high street investments from funds and high net worth investors and a number of shopping centres have been sold by de-leveraging banks to core buyers, including German Funds and UK REITS.

Industrial

Take-up in 2015 reached 4.6 million square feet (425,000 square metres), which is 30% ahead of 2014. This equates to over 200 transactions, compared to 175 in 2014. Sales accounted for 68% of all transactions.

Prime industrial rents rose 16% in 2015 to €7 per square foot (€75 per square metre) and with the shortage of modern space, commentators are suggesting a further 25% rental growth during the course of 2016 to €8.75 per square foot (€94 per sq m). Current rental levels make speculative development unviable, so the anticipated rental growth this year is likely to result in an uptick in development activity. At present, we have the only speculative development under construction, at Horizon Logistics Park, with practical completion scheduled for Q1 2016.

Sources:

§ Economic and Social Research Institute (ESRI), Ireland

§ Goodbody research department

§ Davy research department

§ Central Statistics Office, Ireland

§ Oxford Economics

§ CBRE Outlook presentation and report, January 2016

§ CBRE research department

§ CBRE development supply map

§ MSCI Irish briefing 2015 and presentation, 28th January 2016

§ JLL research department

§ Savills research department

§ Investec research department

Appendix 1: EPRA Performance Measures

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:

a) 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.

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 2015 to 31 December 2015 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 2015 to 31 December 2015 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 21 February 2016

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 2015, 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 ("IAS 34").

Our responsibility

Our responsibility is to express to the Company a conclusion on the set of condensed 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. 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 2015 are 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

21 February 2016

Green REIT plc

Unaudited condensed consolidated statement of cash flows

for the six month period to 31 December 2015

The accompanying notes are an integral part of these financial statements

Green REIT plc

Notes to the condensed 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 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 2015 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 year ended 30 June 2015, 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 year ended 30 June 2015, were approved by the Board of Directors on 28 October 2015 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 2016.

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

Green REIT plc

Notes (continued)

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 2015 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 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 on the following pages:

Green REIT plc

Notes (continued)

4. Operating segments (continued)

(i) Includes hotel and car park assets

*Total cash and cash equivalents and short term deposits at 31 December 2015 is €46.9 million (30 June 2015: €37.6 million). The total segment assets per the unallocated segment above is €16.9 million (30 June 2015: €28.2 million) and primarily represents cash and cash equivalents. 

** The Group's segmental analysis is reported including the Group's share of the Joint Venture income, expenditure and assets. These figures are then excluded from the total to reconcile back to the Group's consolidated position as per the interim accounts.

Green REIT plc

Notes (continued)

4. Operating segments (continued)

(i) Includes hotel and car park assets

Green REIT plc

Notes (continued)

5. Gross and net rental and related income

6. Net movement on fair value of investment properties

7. Net finance (expenses)/income

Green REIT plc

Notes (continued)

8. Taxation

As disclosed in the 2015 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 2015 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.

As per Note 8 of the 2015 Annual Report, quantitative information about fair value measurements using unobservable inputs (level 3), per property class are set out in the table on the following page:

Green REIT plc

Notes (continued)

9. Investment property (continued)

(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 €107.4 million reduction in fair value whilst a 1% decrease in yield would result in a fair value increase of €155.2 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

Green REIT plc

Notes (continued)

10. Investment in joint venture

At the 31 December 2015 the Group, through its wholly owned subsidiary Green REIT (Central Park) Limited was 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 has classified this joint arrangement as a joint venture, as both parties have joint control over the arrangement.

The Central Park Limited Partnership properties were externally valued by JLL at 31 December 2015 on the basis outlined in Note 8 of the 2015 Annual Report.

During the period, the Group provided €3.1 million further funding to the Partnership and received a distribution of €0.6 million.

On 8 January 2016, the Group acquired the remaining 50% of The Central Park Limited Partnership from PIMCO Property Fund II. For further details see note 20.

The detailed breakdown of the Group's 50% interest in the Central Park Limited Partnership joint venture is set out on the following pages:

Green REIT plc

Notes (continued)

10. Investment in joint venture (continued)

(i) Summarised income statement for six months to 31 December 2015

Green REIT plc

Notes (continued)

10. Investment in joint venture (continued)

(ii) Summarised balance sheet