GRN.L Regulatory News (GRN)

INTERIM RESULTS TO 31 DECEMBER 2016

ROBUST EARNINGS PERFORMANCE AS ASSET MANAGEMENT AND DEVELOPMENTS DELIVER FURTHER VALUE

21 February, 2017 - Green REIT plc, ("Green REIT" or the "Company"), announces its results for the six months to 31 December 2016, the highlights of which are as follows:

FINANCIAL HIGHLIGHTS

§ 4.2% increase in EPRA NAV to 158.2 cents per share before payment of the FY 2016 dividend in November 2016, or a 1.1% net increase to 153.5 cents per share post dividend

§ EPRA EPS increase of 37% to 2.6 cents per share (2015: 1.9 cents)

§ EPS 6.4 cents per share (2015: 10 cents)

§ Strong growth in EPRA Earnings of 41.5% to €17.8 million for the 6 months (2015: €12.6 million), with EPRA Earnings contributing 41% of total profit (2015: 19%)

§ 6.2% increase in contracted annual rent to €65.1 million from 21 properties

§ Profit for the period of €43.7 million (2015: €67.1 million) including revaluation surpluses

§ 4.4% increase in property value for properties held throughout the period, or 5.4% when the additional lands acquired at Horizon Logistics Park are included

§ 13.5% total return for the 12 months to 31 December 2016 (2015: 20%)

§ Property LTV remains low at 21.3% (30 June 2016: 20.6%)

STRATEGIC & OPERATIONAL HIGHLIGHTS

§ Development - further value to be added from pipeline

- Completion and letting of first office development at 32 Molesworth Street, Dublin 2, with contracted rent of €1.67 million, 11% ahead of 30 June 2016 ERV

- Other three office schemes progressing well, with an increased level of interest from prospective tenants

- Good momentum at Horizon Logistics Park - letting of our first speculative unit to DHL at €8.50 per square foot, completion of our next unit due in April 2017, which has been reserved for a tenant, and a pre-letting agreed with Kuehne+Nagel for a purpose built 80,000 square foot unit

- 6.1 acres at Central Park and over 264 acres at Horizon Logistics Park available for potential future development, 164 acres of which were acquired in December 2016

Note: please see Appendix 2 for an explanation of EPRA performance measures

§ Asset Management - delivering increased rental income, tenant retention and secure long term income

- €4.1 million of new annual rent secured through new lettings, the largest of which was to MaplesFS on 32 Molesworth Street for €1.67 million per annum

- One Albert Quay in Cork now fully let, with contracted rent of €4.1 million per annum to high quality tenants and a WAULT of 10 years

- WAULT across the portfolio remains strong at 7.5 years (30 June 2016: 7.8 years)

- Continued low EPRA Vacancy Rate of 1.4% (30 June 2016: 1.7%)

- Three tenant breaks not exercised, covering €1.2 million of annual contracted rent

Gary Kennedy, Chairman of Green REIT plc, commented: "Our strategic focus continues to be on driving risk adjusted returns for shareholders, with a greater focus on income returns in line with where we are in the cycle. Our development phase is now well advanced and we look forward to the completion and letting of these high quality buildings into what is a robust office and industrial occupier market in Dublin."

Pat Gunne, Chief Executive of Green Property REIT Ventures Limited, added: "We have great optionality around our future development programme, both in the short and the longer term, with a projected end value in excess of €460 million. In the office sector, a likely beneficiary of Brexit, we have the potential to develop an additional 400,000 square feet at Central Park. Whilst in the logistics sector, which saw the highest return in the Irish market in 2016, we now have the potential to create Ireland's leading logistics hub, with 264 developable acres between Dublin Airport and the M50 motorway."

ENDS

A conference call for investors and analysts will be held at 08.30 GMT (03.30 ET) on 21 February 2017 and those wishing to dial in should contact FTI Consulting on the details below.

Contacts

Green Property REIT Ventures (Investment Manager to the Company)

Niall O'Buachalla, Chief Operations Officer

+353 (0) 1 2418400

FTI Consulting (IR and PR to the Company) greenreit@fticonsulting.com 

Dublin London

+353 (0) 1 6633686 +44 (0) 20 37271000

Jonathan Neilan Giles Barrie

Patrick Berkery Claire Turvey

Polly Warrack

About Green REIT plc

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

Note on forward-looking 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

Our strategic focus continues to be on driving risk adjusted returns for shareholders, with a greater focus on income returns in line with where we are in the cycle, continuing with our goal to progressively increase the dividends paid to our shareholders.

During the period we completed and let our first office development at 32 Molesworth Street, in Dublin's core CBD. The quality of the tenant secured, MaplesFS, is a reflection of the building's outstanding quality and location, and we believe this bodes well for the letting of the Company's other Dublin office schemes at One Molesworth Street and 5 Harcourt Road, both in Dublin 2, and at Central Park in Dublin's south suburbs, which is nearing completion.

The development of these three office buildings is progressing well, as is development at Horizon Logistics Park, Dublin Airport, where there is now good momentum, with logistics being the strongest performing real estate sector in Ireland in 2016. We remain confident that this development pipeline will enhance both the net asset value of the Company and its rental income, thereby feeding into a strengthening dividend from our rental profits in the future.

Ireland - Continued growth amidst increased uncertainty

Despite the economic headwinds and the heightened level of geopolitical uncertainty that has prevailed since the result of the UK referendum on EU membership ('Brexit') and the US presidential election, the Irish economy continues to experience relatively strong growth. Ireland is expected to have been the fastest growing economy in the EU again in 2016, and while growth has been more moderate compared to 2014 and 2015, it is expected to continue through 2017 and 2018 at levels that are well above the EU average.

Importantly, growth in the domestic economy continues to be the greatest driver of this, with the country's unemployment rate at 7.1 per cent in January 2017, down from 8.6 per cent in January 2016, and forecast to end 2017 at 6.3 per cent. Long term interest rates remain low, and while the Irish government 10 year bond rate has increased from 0.50 per cent at 30 June 2016 to 1.1 per cent currently, we believe that both continue to be supportive of commercial property yields.

The potential impact from Brexit on both the Irish economy and Irish commercial real estate is still to be determined, with the general expectation being that export led sectors are likely to be most adversely affected, with Dublin offices a potential beneficiary. While we have not seen many Brexit related relocations or expansions in the Dublin office market to date, the view of some market commentators is that these are likely to be seen from the second quarter of this year. The potential impact of US policy changes on Ireland and on FDI in Ireland in particular is too early to call in our view; we do however continue to see positive sentiment from US office occupiers.

Strong Balance Sheet

Our balance sheet remains strong, with a property LTV of 21.3 per cent and equity gearing of 26.3 per cent at 31 December 2016. We estimate that following the completion of our current development programme our property LTV will be closer to 25 per cent. We continue to enhance the quality of our portfolio and the security of our income, through active asset management together with our development pipeline. We have a further €81 million of capital to deploy between our development costs and the final payment on One Albert Quay in Cork. We will fund this from our revolving credit facility, which we are in the process of increasing from €150 million to €210 million. The quality of our portfolio and our moderate gearing levels put us in a good position to take advantage of any investment opportunities that may arise, such as the acquisition of the additional lands at Dublin Airport in December 2016.

Financial Results and Position

Summary Financial Information

(i) Includes the Company's 50% share of Central Park rent in the 6 months to 31.12.15

Net Asset Value ('NAV')

The key drivers of the increase in the Company's NAV between 1 July 2016 and 31 December 2016 were as follows:

Outlook

We continue to monitor the impact and potential opportunities for the Company arising from Brexit, which we believe will become clearer in the second half of this year. We also continue to monitor the potential impact of evolving US policy on FDI in Ireland, which is a key driver of the Dublin office market. We believe however that it is too early to gauge the likely impact, whether positive or negative, from these significant events for Ireland and potentially for Irish commercial real estate.

Notwithstanding this uncertainty, we maintain a strong focus on delivering risk adjusted returns for shareholders. Our current development phase is now well advanced and we look forward to the completion and letting of these high quality buildings into a robust office and industrial occupier market in Dublin, thereby adding to our existing annual rent roll of €65 million.

We have a high quality property portfolio with secure rental income, a strong balance sheet and further lands for future development should demand necessitate, as well as an experienced management team that continues to be opportunistic and disciplined in its outlook. Through active asset management and our development pipeline we can provide shareholder returns and progress towards our target of a 4 per cent dividend yield on NAV post the completion and letting of our current developments.

We remain positive about the Company's prospects as we move through 2017.

Gary Kennedy

Chairman

21 February 2017

INVESTMENT MANAGER'S REVIEW

In the six months to 31 December 2016 we delivered further asset management successes, which served to increase contracted annual rent by 6.2% to €65.1 million. Key activity in the period included the letting to MaplesFS of the entirety of the newly-developed 32 Molesworth Street and the acquisition of an additional 164 acres of land at Dublin Airport as part of our strategic expansion of Horizon Logistics Park.

We continue to focus on enhancing the quality and security of the Company's income, which had an overall weighted average unexpired lease term (WAULT) of 7.5 years at 31 December 2016. We added €4.1 million of contracted annual rent through new leases during the year, secured a pre-letting on a new industrial unit, subject to planning permission, which will add a further €0.8 million to annual contracted rent, and settled a rent review in Central Park with a 54% uplift in rent from €1.3 million to €2 million.

The overall vacancy rate has dropped to 1.4% at 31 December 2016 (30 June 2016: 1.7%), significantly below the wider market vacancy level, reflecting our active approach to managing vacant space and the quality of the Company's assets.

We have seen significant progress across the Company's development projects, including the completion and letting of 32 Molesworth Street and the increased momentum at Horizon Logistics Park, and we are excited by the prospects that our development assets hold for delivering further returns to shareholders when completed and with tenancies secured. Our latest projections show a return on capital of 42% against the original underwrite target of 28%, against a backdrop of positive occupier market conditions and manageable future supply.

1. ACQUISITIONS

Horizon Logistics Park, Dublin Airport - strategic holding extended

In December 2016 we completed the acquisition of approximately 164 acres of land adjacent to the Company's existing holding at Horizon Logistics Park, Dublin Airport. This brought the Company's total undeveloped land holding for Horizon Logistics Park to approximately 264 acres. The cost of the lands was €12.25 million. These lands will increase the Company's strategic landholding adjacent to Dublin Airport, at a time when demand and rental values for well-located modern logistics units are increasing, and with the logistics sector being the primary beneficiary of online retail developments.

One Albert Quay, Cork - 100% let and final payment due February 2017

In February 2016 we completed the acquisition of One Albert Quay in Cork, a newly built office block of 15,269 square metres (164,360 square feet). In the period since 30 June 2016 further payments have been made to the vendor of €6.5 million, bringing the total paid to date to €47.4 million. The building is now 100% let (30 June 2016: 81% let) by area, with in-place annual contracted rent on the building of €4.1 million. The Company will make a final payment of €4.2 million under the contract at the end of February 2017, bringing the total contract price to €51.6 million.

2. PORTFOLIO VALUATION

The Company's property portfolio was valued at €1.31 billion at 31 December 2016, reflecting a 4.4% increase on assets held throughout the six month period, or 5.4% when the value of the additional lands acquired at Dublin Airport are included. For the year to 31 December 2016 the increase in the value of assets held throughout the period was 16.2%.

In the period from 30 June 2016 to 31 December 2016 the portfolio equivalent yield increased by 30 basis points to 5.0% to 5.30%. This is as a result of an increase in the overall ERV of the portfolio and an increase in rental income following the completion and letting of 32 Molesworth Street and the pre-let of the 44,000 square foot Unit B1 at Horizon Logistics Park to DHL. 

PORTFOLIO VALUATION ANALYSIS

3. ASSET MANAGEMENT

We continue to focus on growing the Company's rental income and enhancing the security of that income through driving the portfolio WAULT higher. 

New Lettings

We secured new lettings that have created €4.1 million per annum of additional contracted rent over 13,600 square metres (146,600 square feet). The largest of these is the letting to Maples FS of the entire of 32 Molesworth Street in Dublin 2. The lease extends to 3,000 square metres (32,300 square feet) in total, with an annual contracted rent of €1.67 million, on a 20 year lease at a blended rent of €557 per square metre (€51.70 per square foot), with a break clause in the tenant's favour on the tenth and fifteenth anniversaries of the lease. The building comprises 372 square metres (4,000 square feet) of a refurbished Georgian building onto which we have added approximately 2,600 square metres (28,300 square feet) of modern new space. The rent secured for best space in the building equates to approximately €56 per square foot. This letting, which is 14% ahead of our most recent estimates, enhances our income profile and overall WAULT.

The second material letting in the period was to DHL Supply Chain (Ireland) Limited, part of the global logistics group DHL, of unit B1 in Horizon Logistics Park. This modern warehouse unit comprises 4,125 square metres (44,400 square feet) and was completed in May 2016. The annual rent agreed is €0.4 million, equating to €8.50 per square foot.

Altogether, the new lettings secured in the period were 14% ahead of valuers' estimated rental values at 30 June 2016.

Pre-Letting Activity

During the period we agreed a pre-letting for new space to be built at Horizon Logistics Park for Kuehne+Nagel, the global transport and logistics company, for a purpose built 7,400 square metres (80,000 square feet) unit. Kuehne+Nagel also has options on two additional units of 3,700 square metres (40,000 square feet) each. The construction of the new units is subject to planning consent, which we expect to be in place by the end of February 2017. As part of this transaction, Kuehne+Nagel, which is an existing tenant in the logistics park, will vacate its current 4,200 square metre (45,000 square feet) unit, which we plan to refurbish and re-let.

Kuehne+Nagel's corporate expansion plan at Horizon Logistics Park reflects its confidence in the park as its preferred location, as well as the outlook for the industrial and logistics sector in Ireland, and bodes well for our overall strategy at the park following the acquisition of additional lands in December 2016.

WAULT

In addition to the initiatives above, three tenants did not exercise their lease breaks which were exercisable in the period, which added 9 years term certain on €1.2 million of annual contracted rent. Overall WAULT decreased marginally from 7.8 years at 30 June 2016 to 7.5 years at 31 December 2016, while 21% of the Company's contracted annual rent has a lease event between 2017 and 2019, and 79% has lease events beyond 2019.

Vacancy

As at 31 December 2016 there was 1.4% vacancy across the portfolio by ERV (30 June 2016: 1.7%). Of the €1 million of annual ERV across our vacant space at 31 December 2016, €0.6 million was under offer and in legals.

ASSET MANAGEMENT INITIATIVES - 1 JULY 2016 TO 31 DECEMBER 2016 (1)

(1) Excludes residential element in Arena Centre

(2) Car spaces excluded on rent psf calculations. Rounded to the nearest zero

(3) Unexpired Term/ WAULT is the rent-weighted average remaining term on leases to lease expiry/ break date (whichever comes first). Excludes residential component in Arena Centre

(4) Excludes licences

4. DEVELOPMENT PROJECTS

During the period we completed and leased the Company's first office development at 32 Molesworth Street, Dublin 2, the letting details for which are set out above. We also commenced the construction of our latest office development at 5 Harcourt Road in Dublin 2, a modern office building of 4,500 square metres (48,200 square feet), with completion due in the first quarter of 2018.

Block H in Central Park, the Company's largest office development by lettable area at 14,000 square metres (150,000 square feet), is due for completion at the end of February 2017. We have seen an increased level of interest in this building over recent months from prospective tenants and are confident that this will in due course convert into the letting of the building.

Our most valuable office development at One Molesworth Street, Dublin 2, is progressing well and is on track for completion by the end of the third quarter of 2017. We expect to see good interest from prospective tenants as the construction programme progresses.

A brief summary of our office development schemes is as follows:

An update on development progress at Horizon Logistics Park is as follows:

5. FINANCIAL REVIEW

NAV Growth

EPRA NAV increased from €1,048 million at 30 June 2016 to €1,060 million at 31 December 2016. On a per share basis EPRA NAV increased from 151.8 cents to 153.5 cents, an increase of 1.1%. The payment in November 2016 of the dividend for the financial year to 30 June 2016, which equated to 3% of the 30 June 2016 EPRA NAV, has been accounted for in full as part of the 31 December 2016 EPRA NAV calculations, where EPRA NAV growth was 4.15% in the period before the impact of the dividend payment.

The main drivers of the growth in EPRA NAV are as follows:

(i) Excludes fair value movements on financial instruments of €0.7m, as per EPRA guidance

Please see Appendix 2 for further EPRA Performance Measures.

Gearing

Property LTV has increased marginally to 21.3% at 31 December 2016, from 20.6% at 30 June 2016, with our equity gearing increasing from 24.4% to 26.3% between the same dates. Total bank borrowings increased from €255.4 million at 30 June 2016 to €278.5 million at 31 December 2016, as a result of drawdowns on the Barclays revolving credit facility to fund development costs, payments on One Albert Quay and the cost of the additional lands acquired at Dublin Airport.

The Company's all-in annual debt cost remains unchanged at 1.9% at 31 December 2016, with a reduction in the overall debt maturity from 4 years at 30 June 2016 to 3.3 years at 31 December 2016.

During the period additional hedging was put in place in the form of forward starting interest rate swaps covering the period from October 2018 to October 2022, at a blended fixed rate of 0.074% per annum on €200 million. These swaps give the Company certainty around its maximum interest cost on €200 million of its debt for the period October 2018 to October 2022, and were in a positive position for us by €734,000 at 31 December 2016.

A summary profile of the Company's debt at 31 December 2016 is as follows:

Earnings per Share ('EPS')

Total EPS for the six months to 31 December 2016 was 6.4 cents, which compares to 10 cents per share for the same period in 2015, a reduction of 36%. EPRA Earnings per Share, which measures EPS on rental profit only, increased by 37% from 1.9 cents to 2.6 cents, while EPS from revaluation surpluses decreased by 47% from 8.1 cents to 3.8 cents. In the six months to 31 December 2015 EPRA Earnings per Share accounted for 19% of total EPS, while it accounted for 41% of total EPS in the six months to 31 December 2016.

This bifurcation between the two components of EPS is a reflection firstly of the absence of a performance fee provision in the current period, and secondly of the anticipated moderation in capital value growth as the Irish commercial real estate market moved from 'opportunistic' mode to one of more sustainable and moderate growth. This is illustrated by the total returns from Irish commercial real estate as measured by IPD/MSCI, which decreased from 25% in calendar 2015 to 12.4% in calendar 2016.

A reconciliation of total profit and EPS to EPRA Earnings and EPRA Earnings per Share is as follows:

Statement of Comprehensive Income

In the six months to 31 December 2015 the Company's interest in Central Park was 50% and was accounted for as an equity interest in the joint venture. With effect from January 2016, following the acquisition of full control of Central Park, it was accounted for on a proportionate basis in line with the rest of our properties. A like-for-like comparison of the profit for the two six month periods is as follows:

Rental Income

Gross rental and related income components are further analysed as follows (with Central Park included proportionately for both 2015 and 2016):

The impact of the spreading of lease incentives granted to tenants, which was €6.9 million in the six months to 31 December 2016, versus €0.9 million in the same period in 2015, arises mainly from the granting of new leases and the renegotiation of existing leases where future rent free periods were granted and which impact the current period. Under accounting rules we are required to recognise the effect of these incentives over the term certain of the leases.

The material movements between the two six month periods are summarised as follows, with our 50% of the Central Park rent in 2015 included within the 2015 rental income number (all in €000):

As highlighted by the table above, the principal rental income increases in the current period came from Central Park, where the Company acquired 100% control in January 2016, and One Albert Quay, which was acquired in February 2016. The combined increase of €5.4 million from these two acquisitions was offset by the income effect of the sale of four properties in the first half of 2016 of €2.3 million, a one-off surrender premium benefit in the six months to December 2015, and by the other items set out above.

Property outgoings decreased by 47% from €1.6 million in the six months to 31 December 2015 (including our 50% share of Central Park costs) to €0.84 million in the six months to 31 December 2016. As per the analysis above, the main savings came as a result of (1) the heightened level of new lease and lease renegotiation activity in the prior period, in which a significant level of lease events were dealt with, principally at George's Quay, and (2) a reduction in vacant building costs as our vacancy rate reduced over the period. As our development properties complete and are leased we will incur additional agents and legal fees, which will be amortised over the term certain of the initial leases.

Administrative Expenses

Administrative expenses decreased by €0.5 million, or by 29%, from €1.7 million in the six months to 31 December June 2015 (including our 50% share of Central Park costs) to €1.2 million in the year to 30 June 2016. The main item causing the reduction in cost relates to unrecoverable VAT in the prior period which was subsequently refunded by Irish Revenue and which is no longer a cost to the Company. The principal recurring cost items within this administrative expenses caption are directors' fees, external and internal audit fees, tax compliance and advice fees, corporate insurances, depositary and other regulatory costs.

Investment Manager Fees

The base fee charged in the period was €5.3 million (2015: €4.7 million), with the increase in the fee reflecting the increased NAV of the Company on which the base fee is calculated. The base fee is calculated and paid calendar quarterly in cash on the NAV at quarter end, on the basis of one per cent per annum of NAV. No performance fee has been provided for the six months to 31 December 2016 (2015: €5.8 million), as set out in further detail in note 19 of these results.

6. OUTLOOK

The outlook for the Irish property investment market remains positive, with longer term interest rates being substantially below the prevailing yield levels in the market place.

The bifurcation of pricing between prime and secondary is an ongoing theme, with core international capital continuing to seek out prime assets, whilst there is considerably less identifiable capital chasing the secondary market in any meaningful scale. The exception to this is US private equity acquiring loan portfolios which hold a lot of secondary quality assets, who are ultimately likely to be looking to execute a wholesale to retail strategy. We have reduced our exposure to secondary assets, which now accounts for just seven per cent of our portfolio.

On the occupier side, Brexit is still the predominant theme, and the outlook for corporates moving to, or expanding in, Ireland, particularly in the financial and fund administration sectors, is improving all the time, with the expectation that we will start to see first movers from quarter two 2017 onwards. Our future development at Central Park is well positioned in that context, and we continue to monitor the supply of and demand for space in assessing the risk reward metrics for future capital allocation decisions. Clearly the priority at this juncture is to de-risk our existing development programme, as evidenced by the successful activity at 32 Molesworth Street and Horizon Logistics Park.

We are pleased to have increased the Company's exposure to the logistics sector, with our latest acquisition bringing our land holding at the airport to 264 acres. The projected end development value of Horizon Logistics Park over the longer term is in excess of €360 million, so over time logistics will become a more meaningful part in the portfolio. We feel the growing theme around e-commerce driving logistics demand in the retail sector is a secular as opposed to cyclical play, with Ireland at the early stages of that evolution, and we plan to develop into that market over the short and longer term. Our aim is to create the number one logistics park in Ireland at the intersection of the key transport infrastructure nodes, Dublin Airport and the M50 motorway, and with excellent access to Dublin Port through the Port Tunnel.

The geopolitical environment across the globe continues to challenge conventional wisdom and we expect the year ahead will have heightened volatility as we pass through the various scheduled elections in Europe. Our focus continues to be on securing long term income across the portfolio and on NAV per share, with dividend and development profits at the forefront.

Stephen Vernon Pat Gunne

Executive Chairman Chief Executive

Green Property REIT Ventures DAC Green Property REIT Ventures DAC

21 February 2017

Our Market

Economic Overview

Sustained Economic Growth

The Irish economy continues to show sustained growth, with domestic demand growing by 3% in 2016 (3.5% forecast for 2017 and 2018), making Ireland the fastest growing euro area economy for the fourth consecutive year in 2016. While the GDP growth figure for 2016 is still an estimate, it is expected to be in the order of 4.6% for the year and forecast to be 3.4% for 2017. The composite PMI for Ireland for December 2016 was 58.4 (August: 56.9), indicating respondents' confidence that the economy will continue to grow.

Employment continues to grow

Having peaked at 15.2% in February 2012, the unemployment rate stood at 7.1% at the end of January 2017, down from 8.6% in January 2016, and is forecast to end 2017 at 6.3%. Employment growth was 2.9% in the year to Quarter 3, 2016 and is expected to be in the order of 2.3% in 2017.

Foreign Direct Investment (FDI)

FDI continues to be a solid driver of economic growth. The Industrial Development Authority (IDA), the Government body charged with attracting foreign businesses to locate in Ireland, have confirmed that net job creation by them was 11,842 jobs in 2016 (2015: 11,833 jobs). In total, FDI employment in Ireland is now over 200,000 people, or 10% of the total workforce, of which 50% of these multinational jobs are located in the Dublin region. In 2015 Ireland secured 4.3% of all EU FDI, which is well above Ireland's 1.7% share of EU GDP.

FDI investment during 2016 included IT companies Oracle, Facebook, Hubspot, Amazon, Site Minder, LinkedIn, Kellton and First Data, and in the Pharmaceutical/Medical Devices sector Shire, Search Optics, OPKO, Eurofins Lancaster and Fazzi.

Domestic economy key driver

While export growth slowed in 2016, predominately reflecting the devaluation of sterling, domestic demand continues to grow, with strong forecasts for 2017 and beyond. While the pace of growth in retail spending has slowed and in some cases has been a little erratic, the overall picture remains positive. Modest income tax cuts in the 2017 Budget came into play in January 2017. There is continued employment growth and wage inflation, which is estimated at 2.2% for 2016 and forecast to be 2.3% for 2017. In addition, overall inflation in Ireland was 0% for 2016.

The Ulster Bank construction PMI was 58.9 in December (November: 59.8) which is the 40th successive month of growth. While construction activity continues to grow, the pace of growth is slowing. That said, housing recorded a PMI of 60.6 and commercial 61, with the pullback coming from civil engineering at 44.3. This data is consistent with what can be seen on the ground. Commercial and housing development are gaining momentum, housing completions were up 18.2% to 13,376 units in the first 11 months of 2016.

Housing completions are expected to be 18,500 for 2017, with demand estimated at 30,000 per annum.

Moody's is forecasting 5% growth in house prices in the next 12-18 months. All of these factors are positive for consumer sentiment and particularly household incomes for the year ahead.

Capital Markets

The investment market was very active during 2016. Asset sales reached €4.5 billion, the second highest on record (2014: €4.6 billion), up 29% from €3.5 billion in 2015. Following the global financial crisis and the need to de-leverage by Irish banks, approximately 60% of prime offices and the majority of the larger prime shopping centre assets, including Blanchardstown, Liffey Valley and Dundrum (via a loan sale), have now been sold and in all cases the buyers have been well capitalised, long term investors. As we look forward to 2017 and beyond it is likely therefore that volumes will reduce to a normalised long term level, expected to be in the order of €2 billion per annum.

The top ten investment transactions in 2016, which account for 56% of the total capital deployed, were as follows:

2016 was unusual in that there were a number of high value prime shopping centre disposals. In the period, measured by value retail accounted for 50% of the transactions, offices for 31%, mixed use for 10% and the remaining 9% was divided between residential, industrial and hotel investments.

There has been a notable increase in the number of European (excluding UK) buyers, who accounted for 31% of the acquisitions in 2016, up from 18.6%, six months ago. This is consistent with an increasing demand from long term institutional capital looking for prime assets. Irish buyers (including REITs) have remained relatively consistent at 28.5%, US buyers have reduced from 34.3% six months ago to 24%, UK buyers accounted for 10.5% and the remaining 6% is undisclosed.

In addition to direct real estate transactions, NAMA, and to a lesser extent RBS and Danske Bank, continued de-leveraging by selling portfolios of loans secured on property. In 2016 approximately €12 billion of loan sales were traded, the largest being as follows:

The 2016 Finance Bill introduced changes to the tax treatment of certain structures used to acquire real estate loans & assets. Effectively, these changes are tightening up on certain structures which were heretofore exempt from tax. The changes were enacted in December 2016 so it is still too early to say how they will impact the market, although we have to date not seen a rush to sell by these property owners. Given the depth of buyers for prime properties, we do not expect these changes to impact on prime pricing. Private Equity buyers, mostly from the US, have been net sellers of their Irish positions as the cycle moves from the opportunistic phase, and the tax amendments may well impact on pricing of future portfolios, particularly of more secondary and regional assets, where investor demand is thinner.

Prime yields have remained stable in the last 12 months. Prime offices remain at 4.50-4.65%, prime high street at 3.25% and prime retail warehousing at 5%. Prime industrial has seen some yield compression, moving from 5.75% 6 months ago to 5.50% today. Looking forward, the demand for prime assets continues to grow and the supply of same is very restricted, the result of which is the likelihood of further forward funding deals where Institutional buyers fund speculative development. It may also result in some further yield compression at the very prime end. At the same time there is a reducing pool of buyers for secondary assets, so we are starting to see a two tier market emerge.

Property Returns

The MSCI index recorded total returns for 2016 at 12.4% across all property sectors. This is down from 25% in the year 2015 and 40% in 2014, and is consistent with a maturing cycle and a real estate sector which was severely impacted by the financial crisis. The total return in the UK for 2016 was 3.5%. Given that yields have remained stable and rental growth is moderating, we are likely to see a lower total return in the year ahead.

Of the total return for Ireland for 2016, the impact of yield movement accounted for 1.8% and the rest of the return came from a combination of income return and rental value growth. The top performing sector with a total return of 19.3% was Industrial, followed by Retail at 12.9% and Offices at 11.9%. The MSCI all-property equivalent yield remains at 5.8%.

Occupier Markets

Dublin Offices

2016 was another record year for leasing activity in the Dublin office market, with total take-up for the year at 246,084 square metres (2.65 million square feet). This compares to the long run average of 167,000 square metres (1.8 million square feet). Leasing activity was concentrated in the city centre, which accounted for 77% of gross take-up, with Dublin 2/4 accounting for two thirds of that.

The majority of tenant demand is for smaller suites of offices, with 72% of take-up in 2016 being for space of less than 929 square metres (10,000 square feet). At the other end of the spectrum there were no lettings of over 9,290 square metres (100,000 square feet) while there were eight lettings of over 4,645 square metres (50,000 square feet) which accounted for 3% of total take-up.

Gross take-up by sector was as follows:

Dublin City Centre

Dublin Suburbs (all)

Looking forward, 2017 is set to be another active year, with office agents recording over 260,000 square metres (2.8 million square feet) of current demand. Whilst it is still very early days to gauge the impact of the UK referendum to leave the EU ('Brexit'), and it may be years before the full impact is known, it would appear that the Irish office market and the Dublin office market within that in particular is likely to be a net beneficiary of Brexit. We are however seeing real interest for UK business that will need an EU base, and the expectation is that some Brexit related lettings or agreements to lease (if a property is under construction) will occur during the course of 2017.

The greater Dublin office vacancy rate has continued to decline, and currently stands at 6.6% down from 8.4% in June 2016 and 8.7% in December 2015. The Dublin 2/4 vacancy rate currently stands at 4.7% (June 2016: 6.1%), while the grade A vacancy rate is 2.4% (June 2016: 2.4%) The vacancy rate in the south suburbs is 8.4% (June 2016: 10.4%) and the grade A vacancy rate is 5.9% (June 2016: 6.8%).

There is currently 382,500 square metres (4.12 million square feet) of office development under construction in the city centre, in 27 schemes, of which 24%, or 92,000 square metres (1m square feet) is pre-let, and 76%, or 290,000 square metres (3.1m square feet) is being built speculatively. 16 of these developments, totalling 223,500 square metres (2.4 million square feet) are due for completion in 2017, with the remainder in 2018 and 2019. In addition, there is 19,510 square metres (210,000 square feet) under construction speculatively in the south suburbs.

Looking beyond the current phase of development projects, there is an additional 518,000 square metres (5.58 million square feet) in 46 schemes that have a live planning permission in place, which could be mobilised should demand necessitate. Funding for speculative development remains challenging, with many developers currently waiting for a pre-letting in order to commence construction.

Prime headline rents in Dublin city centre have grown 14% in the twelve months to December 2016 and currently stand at €673 per square metre (€62.50 per square foot), while in the south suburbs rents have remained stable at €296 per square metre (€27.50 per square foot). Market commentators are suggesting modest single digit rental growth for 2017.

Cork Office Market

Total take-up in the Cork office market reached 21,500 square metre (231,000 square feet) for 2016. This is marginally down on 2015, when take up reached 25,400 square metres (273,400 square feet) and is somewhat as a result of a lack of new development and limited Grade A stock. Of the take-up, 95% was lettings of Grade A accommodation, much of which was the let up of our building at One Albert Quay.

As a result of consistent take-up and a lack of new development, the Cork office vacancy rate continues to decline. The vacancy rate peaked in 2012 at 26% and 12 months ago stood at 18.6%. Today the vacancy rate is 11.5% and most of this is described as older, obsolete space, with little Grade A accommodation currently available to let.

Rental growth in the Cork office market was 9% for 2016, with current Grade A lettings achieving €323 per square metre (€30 per square foot).

Looking forward, there is only one development under construction in the city centre, the former Capital Cinema site at Grand Parade. This is a mixed use scheme incorporating 5,000 square metres (54,000 square feet) of offices and 4,650 square metres (50,000 square feet) of retail accommodation and this is set for completion in February 2017. In addition there is approximately 70,600 square metres (760,000 square feet) of potential office development in the city centre where there is a planning permission in place and a further 32,500 square metres (350,000 square feet) of development potential, with planning in the suburbs. We expect that the majority of this development potential will not be built speculatively and will require a part/full pre-letting.

Retail

The picture for retail is more muted, with growth in sales moderating. In the year to December 2016, the provisional estimates is that the volume of retail sales increased by 5.9% in 2016 (2015: 8.2%) and by 3.8% in value terms (2015: 4.9%). If motor trade is excluded there was an increase of 4.3% in the volume of retail sales and 2.1% in value. There are a combination of factors impacting on these numbers; generally there has been a deterioration in consumer sentiment since the Brexit referendum in June 2016. The KBC/ESRI consumer sentiment index recorded 96.2 in December 2016, a 22 month low and down from a high of 108.6 in January 2016. The devaluation of Sterling is having a negative impact on retail sales, particularly in centres located on the border with Northern Ireland. In addition, the sterling factor is having a positive impact on on-line sales which are up 15.4% year on year since December 2015.

Motor & Fuel sales have increased by 6% in 2016 in value terms and 6.9% in volume, Food Businesses is up 0.3% in value and 1.5% in volume, while Household Equipment is down 1.4% in value and up 3.9% in volume.

Vacancy rates for prime retail are negligible and as a result there has been healthy rental growth in recent month. Rents on Grafton Street in Dublin 2, Dublin's most prime high street, are now €6,300 per square metre (ITZA) (€585 per square foot), having increased 15% year on year. Henry Street in Dublin 1 is now €4,500 per square metre (ITZA) (€418 per square foot), up 29% and prime shopping centres have seen stable rents at between €1,500-€3,000 per square metre (€140-€278 per square foot) on average. Retail warehousing has also seen growth, with prime recording rent rises of approximately 9% year on year, and for some provincial centres rents have increased by 25% and currently stand at between €129 and €169 per square metre (€12-15.70 per square foot) per annum. While rental growth looks strong, it is important to note that it is coming from a low base and still well below previous peaks.

Recent new entrants to the market have included New Balance, Jigsaw, Benefit Cosmetics, Sostrene Grene and & Other Stories. In addition, Arcadia is replacing five of their units in Jervis Centre on Henry Street with a new flagship Topshop store. A number of retailers have been expanding in the period, including Mountain Warehouse, EZ Living, Homestore & More and Harvey Norman. Other brands looking for stores include Smiggle, Geox, Flormar and Parfois.

Development in the retail sector is limited to extensions to existing schemes. Those underway at present include an extension to Eyre Square Shopping Centre in Galway, City Square Shopping Centre in Waterford and the re-development of the Frascati Centre in Blackrock, South Dublin.

Industrial Sector

Take-up for 2016 reached 289,945 square metres (3.12 million square feet), down 32% on the record level achieved in 2015. This is as a result of a shortage of modern facilities rather than a lack of demand.

In 2016 there were 183 transactions, of which 52% were lettings and 48% were sales. There were eight lettings of over 4,650 square metres (50,000 square feet) and over 85% of lettings were for space of less than 1,850 square metres (20,000 square feet).

We saw prime industrial rents rise by 12.9% in the 6 months to June 2016 and on an annualised basis to December 2016 they rose by 25% and currently stand at €94 per square metre (€8.70 per square foot). Industrial rents are forecast to continue to rise in 2017, with estimates of in the order of 10%. At these rental levels it is now viable to develop. At present Green REIT is the only developer building industrial speculatively.

Industrial yields remain stable at 5.50% and industrial accounted for a mere 2% of the investment spend in 2016.

SOURCES:

1. JLL research reports

2. CBRE outlook presentation and research reports

3. Lisney outlook 2017

4. Central Statistics Office website

5. Investec research

6. KBC/ESRI Consumer Sentiment Index

7. Visa Irish Consumer Spending Index

8. Davy research

9. Goodbody research

10. Investec research

11. Central Statistics Office

12. Ulster Bank PMI

13. Moody's research

Appendix 1: Further Portfolio Information at 31 December 2016

PORTFOLIO OVERVIEW:

§ Portfolio now comprises 21 assets with a total floor area of 228,570 square metres (2.46 million square feet) (30 June 2016: 226,000 square metres (2.43 million square feet)

§ Significant Dublin focus (93% by portfolio value) and dominated by high grade office assets (79%)

§ Value by sector 1: 79% offices, 12% retail, 2% industrial and 7% other

§ Yields:

§ Portfolio is 4% reversionary at 31 December 2016 (30 June 2016: 5%)

§ Diversified tenant base, with 39% of contracted rent from financial services, 22% from TMT and 18% from retail

§ Top 10 tenants account for 49% of contracted rent, with our largest tenant (Vodafone) accounting for 11% of the total

(1) On asset by asset basis including 100% of One Albert Quay (Cork). Arena categorised as "other"

RENTAL INCOME (1)

(1) Includes Green REIT's 60% in Mount Street property and One Albert Quay (Cork) acquired portion only

(2) Excludes ERV of development assets which are 1 Molesworth Street, 5 Harcourt Road, Block H Central Park and Unit B2 Horizon Logistics Park. Relates to let property only.

LEASE LENGTHS & VACANCY

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

CONTRACTED RENTS VERSUS ESTIMATED MARKET RENTS (ERVs) (1)

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

SECTORS BY VALUE (1)

(1) Breakdown by asset. Net of costs. Valuation as at 31 December 2016. Includes Green REIT's 60% in Mount Street property and 100% of One Albert Quay (Cork) (contracted to purchase)

LOCATIONS BY VALUE (1)

(1) Breakdown by asset. Net of costs. Valuation as at 31 December 2016. Includes Green REIT's 60% in Mount Street property and 100% of One Albert Quay (Cork) (contracted to purchase)

CONTRACTED RENT BREAKDOWN BY TENANT BUSINESS SECTORS (1)

(1) Includes Green REIT's 60% in Mount Street property and One Albert Quay (Cork) acquired portion only

TOP 10 OCCUPIERS BY CONTRACTED RENT (1)

(1) At 31 December 2016. Includes Green REIT's 60% in Mount Street property and One Albert Quay (Cork) acquired portion only

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

(3) On the basis that 76-79 Harcourt Street (OPW) lease extension is signed

Appendix 2: EPRA Performance Measures

Consistent with other public real estate companies we include recommended best practise performance measures as defined by the European Public Real Estate Association ('EPRA'):

Principal Risks and Uncertainties 

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

External Risks

Internal Risks

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

Statement of Directors' Responsibilities

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

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

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

· Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the period from 1 July 2016 to 31 December 2016 and their impact on the condensed interim consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place during the period from 1 July 2016 to 31 December 2016 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 2017

Chairman Director

Independent review report to Green REIT plc

Report on the condensed consolidated half year financial statements

We have reviewed the condensed consolidated half year financial statements, defined below, in the half year results of Green REIT plc for the six months ended 31 December 2016. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated half year financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

The condensed consolidated half year financial statements, which are prepared by Green REIT plc, comprise:

· the condensed consolidated statement of financial position as at 31 December 2016;

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

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

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

· the explanatory notes on pages 40 to 54 of the condensed consolidated half year financial statements.

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

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

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

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

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

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (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.

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

PricewaterhouseCoopers

Chartered Accountants

Dublin

21 February 2017

Notes:

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

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

Green REIT plc

Unaudited condensed consolidated statement of cash flows

for the six month period to 31 December 2016

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

Green REIT plc

Notes to the condensed interim consolidated financial statements

1. Reporting entity

Green REIT plc (the 'Company') is a Company domiciled in Ireland. The address of the Company's registered office is 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 consolidated financial statements as at and for the six months ended 31 December 2016 comprise the Company and its subsidiaries (together referred to as the 'Group' and individually as 'Group entities').

2. Basis of preparation

The Group condensed interim consolidated financial statements, which should be read in conjunction with the Annual Report for the year ended 30 June 2016, have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 and in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34) as adopted by the European Union.

These results are unaudited but were reviewed by our auditors. The interim consolidated financial statements herein does not constitute the statutory financial statements of Green REIT plc, which were prepared as at and for the year ended 30 June 2016, were approved by the Board of Directors on 27 October 2016 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 2017.

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

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

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 consolidated financial statements are consistent with those applied in the 2016 Annual Report.

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

4. Operating segments

The Group is organised into four business segments, against which the Group reports its segmental information, being Office Assets, Retail 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.

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

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

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

Green REIT plc

Notes (continued)

4. Operating segments (continued)