GRN.L Regulatory News (GRN)

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2015

€1.35 NAV PER SHARE; €157 MILLION ANNUAL PROFIT

FOCUS ON ASSET MANAGEMENT AND DEVELOPMENT OPPORTUNITIES

Dublin, 7 September, 2015 - Green REIT Plc, ("Green REIT" or the "Company"), the Irish property investment company, today announces its results for the year ended 30 June 2015.

Having assembled a portfolio of quality commercial real estate in Ireland, predominantly in Dublin, at early points in the Irish economic recovery, the Company has moved from portfolio assembly to focussing on asset management and development opportunities within the portfolio.

With a total return of 24.4 per cent in the year to 30 June 2015, the focus is firmly on driving further risk adjusted shareholder returns with a prudent gearing level and a moderate level of development exposure. 

FINANCIAL HIGHLIGHTS

§ Strong performance across all metrics

§ Profit for the year of €157 million (30 June 2014: profit of €43 million)

§ Basic EPS of 23.5 cents (30 June 2014: basic EPS of 12.4 cent)

§ Basic NAV of €1.35 per share up 23.6 per cent year on year (30 June 2014 NAV per share of €1.09)

§ Diluted EPS of 23.4 cent and EPRA NAV of €1.32 per share

§ Total return 24.4 per cent in the period

STRATEGIC & OPERATIONAL HIGHLIGHTS

§ Contracted annual rent of €55.7 million from 24 properties

§ Successful period of asset management, with €3 million of new annual income secured in the period, bringing Central Park to full occupancy and reducing vacancy (by ERV) to 2% at 30 June 2015, from 8% at 30 June 2014

§ Development initiatives progressing well - construction underway at three of our five sites, with the other two sites going through the planning process.

§ 9.7% property valuation increase on December 2014, or 24.2% on June 2014 for assets held throughout the period

§ New debt facility put in place of €150 million, which can step up to €290 million at the Company's request

§ EPRA Index inclusion in March 2015, having successfully satisfied the required eligibility criteria during the Index's March 2015 Quarterly Review

§ First dividend paid in March 2015 in respect of the period to 30 June 2014

§ Dividend of 1.6 cents per share or €10.5 million in total, to be paid in Q4 2015 in respect of the year to 30 June 2015

§ Performance Fee of €20.9 million to be settled by issuing 13.9 million ordinary shares to the Investment Manager, in line with total return threshold being exceeded in the year to 30 June 2015

Gary Kennedy, Chairman of Green REIT plc, commented: "This is a strong set of results for the Company's second year of operation. Our strategy of investing shareholders' equity early in the Irish recovery cycle to assemble a portfolio of high quality properties is working well, and we look forward to exploiting the opportunities within the portfolio to add further value."

Pat Gunne, Chief Executive of Green Property REIT Ventures Limited, added: "We are now moving from the portfolio assembly stage to the active management and development phase, which is exciting given the quality of assets we now have in our portfolio. The Irish commercial property cycle has advanced significantly since our IPO in July 2013, as witnessed by our full year results. Maintaining leverage ratios at below industry average and closely monitoring the Dublin development cycle, as we aim for early participation, are central to our strategy of delivering attractive risk adjusted returns."

The Portfolio at 30 June 2015:

§ Portfolio now comprises 24 assets, with a Dublin focus (95% by portfolio value)

§ One Albert Quay office block in Cork contracted at 30 June 2015, with completion due in Q1 2016

§ High concentration in Dublin offices (75% by portfolio value)

§ Investment income yield of 5.4% on 30 June 2015 valuations (6.7% at 30 June 2014 on 30 June 2014 valuations)

§ Total passing rents of €52.4 million per annum (30 June 2014: €28.5 million per annum), increasing to €55.7 million on expiry of rent frees

§ Total floor area of 2.24 million square feet (208,600 square metres) (30 June 2014: 1.55 million square feet (144,324 square metres))

§ 98% portfolio occupancy rate by ERV (30 June 2014: 92%)

§ Leases signed since 30 June 2015 have further reduced vacancy to 1%, with Westend Shopping Park and Parkway Retail Park now also fully let

§ Yields:

¹ Calculated as passing rent at 30 June 2015 over the June 2015 valuation plus notional purchaser's costs

² Calculated as passing rent at acquisition over the actual purchase price plus the actual purchaser's costs

§ Portfolio weighted average unexpired lease term of 5 years (to earlier of lease break and expiry, excluding residential element) (30 June 2014: 6 years)

§ Property value by sector: 75% offices, 20% retail, 2% development land, 1% industrial and 2% other

Acquisitions in the Period:

I. Sapphire Portfolio (October 2014):

§ Contract Price of €375 million, largest single acquisition to date

§ Portfolio comprises 6 properties including iconic office buildings at Georges Quay and George's Court, Dublin 2 and retail and other commercial space in Westend Retail Park, Blanchardstown, Dublin 15.

§ Main office tenants include Pioneer Investments, Invesco, Northern Trust, GAM Fund Management and RBC Dexia

§ Main retail tenants include Next, Heatons, New Look, Lidl, Gap, Nike and Toys R Us

§ Westend Retail Park is one of only 3 retail parks in Ireland with open use consent

§ Total net lettable area of 649,000 square feet

§ Passing rent of €22.9 million per annum at 30 June 2015, with contracted annual rent of €23.7 million

§ 17.5% valuation uplift from acquisition on October 2014 to 30 June 2015

II. 13-17 Dawson Street, Dublin 2 (October 2014):

§ One of Dublin's most prime CBD redevelopment opportunities

§ Contract price of €23 million

§ Local authority planning consent obtained to demolish and rebuild, potentially doubling the lettable floor area. Outcome of An Bord Pleanála (planning board) review awaited

§ Vacant possession obtainable in Q4 2015

§ Delivery of new building expected by Q3 2017, subject to planning

Contracts exchanged at 30 June 2015 - One Albert Quay, Cork

§ Single office block, under construction, with practical completion and initial payment expected in Q1 2016.

§ Lettable area of 166,000 square feet (15,400 square metres) over 7 floors, subject to final measurement.

§ Pre-letting agreements recently signed with Tyco and PwC totalling 89,000 square feet (8,300 square metres). The total annual rent from these two pre-lettings is €2.1 million per annum.

§ Estimated total rent per annum from the building of €3.6 to €4.1 million, subject to achieving full occupancy.

§ Maximum total cost of €53.6 million, dependent on letting position at the final payment date.

§ Capitalisation yield of 6.75 per cent on let areas and 7.00 per cent on unlet areas

§ Acquisition to be funded through the Company's revolving credit facility with Barclays Bank Ireland plc

Contacts

Green Property REIT Ventures (Investment Manager to the Company)

Niall O'Buachalla, COO

+353 (0) 1 2418400

FTI Consulting (IR and PR to the Company)

Dublin London

+353 (0) 1 6633686 +44 (0) 20 3727 1000

Mark Kenny Giles Barrie

Jonathan Neilan Claire Turvey

Melanie Farrell

greenreit@fticonsulting.com 

About Green REIT plc

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

Note on forward-looking 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

Building on Strong Foundations

The Company performed strongly in the year to 30 June 2015, its second year, as evidenced by our results. During the year our portfolio value increased by 140 per cent through a combination of acquisitions, which accounted for 116 per cent, and from valuation uplifts on existing properties, which accounted for 24 per cent of the portfolio value increase. We completed our largest single acquisition, the Sapphire Portfolio for €375 million, which comprises six properties including office buildings at Georges Quay and George's Court, Dublin 2 and Westend Retail Park in Dublin 15. Our development programme is well underway, with construction ongoing at Central Park, Molesworth Street and Horizon Logistics Park.

The successful execution of our investment strategy is driving shareholder value, and the portfolio contains many further value-adding opportunities to be exploited in the coming years. The macroeconomic backdrop in Ireland remains favourable and is expected to continue to do so in the medium term. Ireland was the fastest growing economy in the EU in 2014, with 4.8% GDP growth, and the expectation is that 2015 and 2016 will see continued growth. The expectation is that there will be sustained levels of FDI, particularly from the US, while there is still a significant amount of capital pursuing commercial and residential real estate opportunities.

We are now in the delivery phase of our strategy, with a focus on enhancing shareholder value through the exploitation of the asset management initiatives and development opportunities within the portfolio.

Financial Results and Position

Basic Net Asset Value ('NAV') per share increased year on year by 23.6 per cent to 135 cent at 30 June 2015. The profit for the year was €157 million, an increase of €114 million over the period to 30 June 2014, with Basic Earnings per Share ('EPS') of 23.5 cent (30 June 2014: 12.4 cent).

The Company has a strong balance sheet. During the year we entered into a low cost revolving credit facility with Barclays Bank Ireland for an initial commitment of €150 million. This facility includes the option for the Company to increase the commitment to €290 million. At 30 June 2015 the balance on this facility was €20.7 million. This facility is available to fund the acquisition of One Albert Quay and our development and capital expenditure programme. It will also be used to fund any further acquisitions that the Company may complete.

Summary Financial Information at 30 June 2015

The Company's properties, including its interest in joint venture properties, are valued at €968.3 million at 30 June 2015 (30 June 2014: €402.9 million), reflecting an uplift on 31 December 2014 values of 9.7 per cent or 24.2 per cent on those properties held throughout the financial year. One-off acquisition costs of €9.4 million were incurred in the year to 30 June 2015, with a further €1.6 million expected to be incurred in the acquisition of One Albert Quay in Cork, which was under contract but not completed as at 30 June 2015.

The Company's net asset value ('NAV') at 30 June 2015 was €899.3 million (134.8 cents per share), which compares to €727.8 million (109.1 cents per share) at 30 June 2014, with an uplift in the period of 23.6 per cent. Total return for the period was 24.4 per cent. On a diluted basis the NAV per share is 132.1 cents.

The Company's total annual contracted rent (including its share of JV rents) at 30 June 2015 was €55.7 million (30 June 2014: €29.3 million), which will increase to in the order of €57.8 million with the completion in Q1 2016 of the One Albert Quay acquisition, on the basis of the two pre-leases signed with Tyco and PwC for 54 per cent of the lettable area in the completed building.

Dividends

The Board expects to declare a dividend of 1.6 cent per share, or a total dividend of €10.5 million, to be paid in the fourth quarter of 2015. All of this dividend will be paid as a Property Income Distribution, as defined in Irish REIT legislation.

EPRA

The Company was notified in March 2015 by EPRA, the European Public Real Estate Association, that it would be added to the FTSE EPRA/NAREIT Developed Europe Index as of March 23 2015, having successfully satisfied the required eligibility criteria during the Index's March 2015 Quarterly Review.This index is the leading benchmark of the listed real estate sector globally and the Company's inclusion has heightened its profile among the international investment community while broadening the potential investor base for the Company's shares.

The Investment Manager

The Board has continued to work well with the Investment Manager and looks forward to continuing to work closely with the team as the Company delivers on its asset management and development initiatives across the portfolio. The quality of the tenants secured by the Investment Manager in the period and the progress made with the Company's development projects, is testament to the skills and experience of the management team.

The Board has approved the payment of a Performance Fee of €20.9 million (2.3% of basic NAV) to the Investment Manager, in line with the formula set out in the Investment Manager Agreement entered into in July 2013 and in line with the total return threshold therein being exceeded in the year to 30 June 2015. The Performance Fee will be settled by the issuance of 13,895,291 new ordinary shares to the Investment Manager by the Company. These shares will be subject to the lock-in provisions set out in the Investment Manager Agreement.

Outlook

The Company has a substantial portfolio of commercial real estate assets with a focus on Dublin, in line with our investment strategy. The deployment of shareholder equity at early stages in the Irish macroeconomic recovery is yielding strong capital growth and shareholder returns. Having moved from a portfolio building phase to a delivery phase, the Board is confident that the Company will continue to deliver shareholder returns in line with the Company's investment strategy through the execution of the asset management and development initiatives within the portfolio.

The Board recognises that there are external risks which may impact on the Company's performance, such as economic and political uncertainty in Ireland and internationally, and that the property market is cyclical. We, alongside the Investment Manager, are vigilant in our risk management focus and on delivering shareholder returns, particularly against the backdrop of international equity market volatility and geopolitical uncertainty. We remain confident however that through the Investment Manager we will continue to deliver on the Company's asset management and development strategy against a favourable backdrop of a strong commercial property market, particularly in Dublin, being driven by strong Irish macroeconomic fundamentals.

Gary Kennedy

Chairman

7 September 2015

Investment Manager's Review

Moving from Acquisition to Asset Management Phase

1. ACQUISITIONS & PORTFOLIO SUMMARY

Assembly of a strong portfolio

The year to 30 June 2015 has been another busy one for Green Property REIT Ventures Limited, as Investment Manager of the Company. We completed the acquisition of the Sapphire Portfolio and 13-17 Dawson Street (Dublin 2) and contracted on One Albert Quay in Cork during the year. Having invested or committed all €710 million of shareholder equity by August 2014, our focus shifted during the early part of the financial year from one of property acquisition and portfolio assembly to enhancing value through asset management and property development initiatives.

Any further acquisitions will be done opportunistically and selectively, where we believe that the acquisition has good growth prospects. These opportunities have become more difficult to source.

As at 30 June 2015 the summary portfolio position was as follows:

§ 24 properties valued at €968.3 million at that date, 9.7% above valuations at 31 December 2014, or 24.2% above valuations at 30 June 2014 for properties held at both dates.

§ Total passing rents of €52.4 million per annum (30 June 2014: €28.5 million) (+84% year on year)

§ Total contracted rent of €55.7 million per annum (30 June 2014: €29.3 million) (+90% year on year)

§ Total floor area of 2.24 million square feet (208,600 square metres)

§ 98% portfolio occupancy rate by ERV at 30 June 2015. Lettings completed since year end have further increased occupancy by ERV to 99%.

§ Portfolio weighted average unexpired lease term of 5 years, to earlier of lease break and expiry, excluding the residential units in Arena Centre.

§ Yields:

(1) Calculated as passing rent at 30 June 2015 over the June 2015 valuation plus notional purchaser's costs.

(2) Calculated as passing rent at 30 June 2014 over the June 2014 valuation plus notional purchaser's costs.

(3) Calculated as passing rent at acquisition over the actual purchase price plus the actual purchaser's costs.

§ Value by geography: 95% located in Dublin, of which 53% is in Dublin City Centre.

§ Property value by sector: 75% offices, 20% retail, 2% development land, 1% industrial and 2% other

§ Top 10 tenants account for €26.6 million/48% of total contracted rent (30 June 2014: €19.7 million/67%)

§ One Albert Quay in Cork contracted, completion expected in Q1 2016. Following this acquisition our concentration in Dublin will reduce from 95% to 90%, while our concentration in offices will increase from 75% to 77%.

Activity since 30 June 2015

§ In Westend Shopping Park, Toys R Us have taken a 15-year lease (break option in year 6) paying €325,000 per annum. This letting, along with the recent lettings to Fortress Credit Corp Limited and to Baby Elegance, take Westend to 100% occupancy. Baby Elegance will be replacing The Suit Co when their lease expires in September 2015 on a 20-year term (break option in year 10) paying €181,350 per annum

§ In Parkway Retail Park, Toys R Us have taken a 15-year lease (with a break option in year 5), paying €200,000 per annum. This brings Parkway Retail Park to full occupancy

2. VALUATION ANALYSIS

Note:

3. ASSET MANAGEMENT

The year to 30 June 2015 was a successful one on the asset management front, as demonstrated by the following:

§ Additional Rents - new lettings of 168,533 square feet (15,700 sq m) were secured, adding €3 million of contracted annual rental income

§ Vacancy - the vacancy rate by ERV across the portfolio is now at 2%, down from 8% at 30 June 2014. Including lettings completed since 30 June 2015 the vacancy rate is 1%.

§ Full occupancy achieved at Westend (Dublin 15) and Parkway Retail Park (Limerick) from lettings completed since 30 June 2015

§ Full occupancy at Central Park - three new tenants were secured for the 85,000 square feet of space that was vacant at 1 July 2014, bringing Central Park to full occupancy and adding €2.2 million of annual contracted rent, of which the Company's 50 per cent share is €1.1 million.

4. DEVELOPMENT

Our development programme is well underway. We are currently on site building Block H in Central Park, 32 Molesworth Street and two new industrial units at Horizon Logistics Park. We are awaiting planning decisions on 13-17 Dawson Street and 4-5 Harcourt Road. The fact that we are on site at three locations and have made positive progress on all of our development projects is testament to the strength and depth of our development team. It also serves to highlight the advantage of having well located sites and available finance in terms of delivering new buildings into the earlier stages of the development cycle.

Our intention is to commence on site as early as possible on our remaining Dublin city centre office schemes, with a view to delivering these new buildings by the end of 2017/early 2018. Both Horizon Logistics Park and Central Park have further lands for future development, which the Investment Manager monitors against the backdrop of the market in which we operate, in deciding when to develop these lands.

Development Projects

5. FINANCIAL REVIEW

NAV Growth

NAV increased from €727.8m to €899.3m, or from 109.1 cent per share to 134.8 cent per share (both basic), an increase of 23.6% year on year. The main drivers of the growth in basic NAV per share are analysed as follows, in cents per share:

Basic Earnings per Share

Basic EPS of 23.5 cent per share for the year to 30 June 2015 is broken down as follows, in cents per share:

Gearing

The intention remains that gearing, represented by the Company's aggregate borrowings as a percentage of the market value of the Group's total assets, will not exceed 35 per cent. Our current gearing is 9.5 per cent at 30 June 2015, or 9.9 per cent on property value only, and on the assumption that One Albert Quay and the current development pipeline are financed using debt, we expect the Company's gearing level to reach 25 to 35 per cent of the Group's total assets.

Available financing

The Company entered into a revolving credit facility with Barclays Bank Ireland plc in December which has a limit of €150 million. As at 30 June 2015 the Company had drawn €20.7 million of the facility, leaving a further €129.3 million of debt financing available to draw. The Company also has the option to increase the limit on this facility to €290 million, which if taken up would increase the available financing from this facility to €269.3 million.

The Barclays facility is a flexible facility which can be drawn to fund its financing needs, and the intention is to use the facility to fund the development pipeline, where the estimated capital requirement is in the order of €93 million, and to fund the acquisition of One Albert Quay in Cork, where the estimated maximum cost is €53.6 million. To the extent that any further property acquisitions are completed this facility would be used to finance them.

Joint Ventures

The Company entered into a joint venture with PIMCO in February 2014 for the acquisition of Central Park, in which the Company has a 50 per cent interest. The Company has no other joint venture interests and we do not presently envisage entering into any further joint venture arrangements.

EPRA Performance Measures

6. INVESTOR RELATIONS

We recognise the importance of communication with shareholders. Our investor relations programme is designed with a view to ensuring that we communicate regularly with the Company's major shareholders and with potential investors. We also seek to maintain a dialogue with analysts and the sales teams within our broker firms and other brokers. Communication is carried out through various means, including one-to-one meetings and calls, roadshow meetings following results, attending investor conferences and site tours to show investors our properties. The senior management team of the Investment Manager represent the Company in meetings with investors and analysts, and the main geographies covered are the UK, the US and Europe.

During the year to 30 June 2015 there were 163 meetings with existing and potential shareholders, broken down geographically and by meeting type as follows:

The Company's AGM also provides an opportunity for shareholders to meet with and to put questions to the Chairman, the Directors, the Committee Chairmen and representatives of the Investment Manager. Other ways in which we communicate with shareholders are through Interim Management Statements, our semi-annual and annual results and announcements of our larger transactions, be they acquisitions, developments or leasing related transactions. All of these documents and all of the Company's announcements can be found on the Company's website www.greenreitplc.com.

7. THE MARKET

Irish economic recovery began in early 2013, following an unprecedented period of deep recession from 2008 to 2012. This recovery is continuing, with Ireland's GDP growth of 4.8 per cent in 2014 the highest in the EU, and with an expectation of in excess of 5 per cent GDP growth for 2015 by some commentators, which again would be the highest in the EU for the fourth year running. The economic fundamentals continue to strengthen, with Ireland expected to have the highest rate of employment growth in the OECD in 2015 (3 per cent in the year to 30 June 2015), and with the unemployment rate standing at 9.5 per cent in July 2015, having dropped from a peak of 15.2 per cent in early 2012 and from 11.2 per cent at 30 June 2014. With regard to wage inflation, private sector wages increased by 2.3 per cent in the year to June 2015. Consumer sentiment has improved, there is growth in retail sales and there are positive prospects for continued growth in FDI. The Irish budget deficit is expected to narrow to 2.3 per cent by the end of 2015, from 4.1 per cent for 2014. The country's debt to GDP ratio, while still high, decreased from 124.2 per cent at the end of 2013 to 114.8 per cent at December 2014. The interest rate backdrop in the Eurozone remains favourable and the ECB's programme of quantitative easing is expected to continue through to late 2016.

The impact of this economic recovery on the property sector in Ireland continues to be particularly evident in Dublin and in the Dublin office occupier market, where vacancy rates for Dublin 2 and Dublin 4 offices are at record low levels of c.1.6 per cent and where there is little new supply of quality office space in Dublin city centre expected until 2017, when pre-let offices under construction are taken into account. With supply continuing to be well below trend and demand remaining resilient to date, we expect further more modest growth in Dublin office rents throughout the remainder of 2015 and for 2016 and 2017. Thereafter increased supply should support a more balanced market, assuming we do not have a dramatic reduction in demand which would lead to a steep correction as witnessed in previous cycles.

With regard to the retail occupier market, retail sales volumes in Ireland were up 7.4 per cent for the year to the end of May 2015, and Goodbody estimate that consumer spending will increase by 2.6 per cent over 2015. The ESRI's Consumer Sentiment Index, Index of Consumer Expectations and the Index of Current Conditions all recorded their highest levels this year in June 2015 and all three indices are now at the highest level recorded since the first quarter of 2006.

The Consumer Sentiment Index rose to 102.8 in June from 98.5 in May. The three month moving average was also up in June 2015. The two main sub-indices: an index of consumer expectation that focuses on how consumers view prospects over the next 12 months and an index of current economic conditions, focusing on consumers' views of the present situation also rose to 95.4 and 113.9 respectively. The three month moving average for both indices is also up in June.

This upturn has not yet translated into rental growth but with a shortage of good quality, well located retail units, growth should emerge in the short term. On a cautious note, however, the recent examinership petitions by Best Menswear and by Mothercare Ireland were somewhat surprising in the context of these improvements in consumer sentiment and spending.

With regard to the investment market, as expected NAMA and other lenders have continued to deleverage at pace in 2015 and competition for these assets remains healthy. With regard to buyer profile, this is evolving in that the largely US private equity investors who deployed their capital at early points in the recovery cycle have been selling, with these properties being bought by longer term capital from the US, Europe and domestic investors.

8. ONE ALBERT QUAY, CORK

We look forward to completing the acquisition of this building in the heart of Cork city centre, on its completion in the first quarter of 2016. Construction is progressing well and is on programme, and with over half of the building already pre-let to Tyco and PwC, the leasing programme for the remainder of the building is also progressing well. This property will add circa €4.1 million to the Company's annual passing rent when fully let and will further enhance shareholder returns.

9. PRIORITIES FOR THE YEAR AHEAD

Having commenced our acquisition programme in the fourth quarter of 2013, the Company now has a substantial portfolio of 24 properties valued at €968 million at 30 June 2015, and with One Albert Quay in Cork contracted at 30 June 2015. We feel that the portfolio, being predominantly in Dublin and focussed towards the office sector, with a controlled level of development, is well placed to capture future growth to deliver further shareholder value. Our focus and priority for the year ahead is on executing our asset management strategies across the portfolio, and to develop new buildings in Dublin, into an office market where vacancy rates are continuing to reduce and where supply of new space in the short to medium terms is limited. We remain confident that this strategy will drive returns for our shareholders.

Our primary focus is on extracting returns from managing and developing the assets, with a strong bias towards mitigating risk around our debt and development profile, whilst extending our lease terms for maximum income certainty in the future.

Stephen Vernon Pat Gunne

Executive Chairman Chief Executive

Green Property REIT Ventures Limited Green Property REIT Ventures Limited

7 September 2015

Our Market

Ireland was the fastest growing economy in the Euro area in 2014, achieving GDP growth of 4.8%. Forecasts are for GDP growth in 2015 of up to 5%, which is likely to outperform the rest of Europe.

Domestic demand is now the key driver of GDP growth, a positive indicator for performance of the retail sector. Growth in domestic demand is expected to increase by 4.3% in 2015 and 5.1% in 2016, up from 2.9% in 2014. The export sector is benefitting from the depreciation of the Euro and growth in Foreign Direct Investment ("FDI") is adding to job growth and the resultant demand for office space.

The unemployment rate currently stands at 9.5% (August 2015) which compares to 11.2% in June last year and 15.2% at its recessionary peak in February 2012. FDI related employment is up 26% since 2009, with 175,000 persons currently employed by FDI related industry. In H1 2015 a further 2,829 FDI jobs were announced, of which 39% are in Dublin. Some of the larger announcements include-Zimmer, AirBnB, Zalando, Bausch & Lomb, Alexion, Viagogo and the expansion of Apple and Northern Trust existing facilities. The Industrial Development Agency of Ireland has an aggressive target of FDI job growth of 3.5 to 4% per annum to bring the total FDI employment to 209,000 people by 2019.

2014 was a record year in the Irish commercial property market with €4.5 billion invested in direct property, 25% ahead of the previous peak in 2006 with a further €21 billion of loan sales secured on real estate. While no commentator is suggesting that 2014 will be repeated, momentum continued in the first half of 2015 with €1.7 billion invested, with forecasts of €3-€3.5 billion to be deployed by end of 2015.

In the first half of 2015, US buyers accounted for 44% of capital invested in real estate, Irish buyers for 34%, Europe for 20% and UK for 2%. While US private equity dominated the buyer list to date, we are now seeing the emergence of core long term capital. In the first six months of 2015, in addition to Irish institutional buyers, we have seen a number of German funds in the market and successful buyers have included Union Investment and REALIS. From the US, Starwood REIT made their first investment outside the US and acquired a €450 million portfolio of Dublin offices from a US private equity fund. Offices remain the preferred sector of choice, accounting for 68% of the spend in the period, followed by mixed use (12%), retail (11%) and multifamily (9%). Finally, Dublin remains the preferred location of choice, though we are seeing more investment outside the capital. In H1 2015, 79% of capital deployed was in Dublin, in 50 deals, while 11.5% of the total deployed was outside Dublin in 17 deals and there were 2 portfolio deals including Dublin and non-Dublin assets which accounted for the remainder.

The supply of commercial real estate continues to come largely from the banks as they seek to deleverage. NAMA's balance sheet more than halved during 2014 and the agency now has in the order of €10.8 billion in outstanding senior debt securities and €1.6 billion of subordinated bonds, having started life in 2010 with €30.2 billion of senior and €1.6 billion of junior bonds. They continue to push an aggressive disposal strategy. In addition, a number of banks, including Ulster Bank (RBS), KBC and Lloyds are selling both assets and loans. It is expected that most bank deleveraging will be completed by the end of 2015, with potentially a residual amount to be dealt with in 2016. In addition to the deleveraging institutions, we are now seeing a steady stream of properties being re-traded from the early cycle opportunistic buyers who were aggressively buying from 2012 on.

With regard to yields, at the prime end there has been further yield compression in the first half of 2015, although they are now showing signs of stabilising. Since December 2014 prime Dublin office yields have moved from 5.00% to 4.50%, Retail (High Street) from 4% to 3.75%, Retail Warehousing from 5.75% to 5.50% and prime Industrial from 6.75 to 6.50%. Investment Property Databank ("IPD") recorded total ungeared returns in H1 2015 at 10.6%, bringing the annualised return to June 2015 to 33.7%. Offices remained the strongest performer, with a total return of 7.4% in Q2 2015, while retail returned 4.1% and the industrial sector appears to have turned the corner with a total return in Q2 2015 of 6%.

1. Sector Commentary

Offices

While 2014 was a record year on the occupational front with 225,000 square metres (2.4 million sq ft) of gross take-up, 2015 is continuing at a good pace. H1 2015 has recorded total take up of 108,283 square metres (1.2 million sq ft) which compares to 92,903 square metres (1 million sq ft) of take up in the same period last year. Dublin CBD accounted for 73% of the total office occupier market, with Dublin 2 (core CBD) accounting for 23%. Of the suburban take-up, the south suburbs accounted for 67%.

In H1 2015, take-up was split between the various sectors as follows:

While the average deal size in the first half of 2015 was 993 square metres (10,693 sq ft), 30% of all new lettings were under 929 square metres (10,000 sq ft) and 30% (5 deals, including pre-lettings) were over 3,251 square metres (35,000 sq ft). There were two pre-lettings of buildings under construction in the period; Bank of Ireland have pre-let 12,012 square metres (129,295 sq ft) in Baggot Plaza on Baggot Street and AerCap, one of the world's largest airline leasing companies have pre-let 6,000 square metres (64,583 sq ft) in "LXV" at 65 St.Stephen's Green, Dublin 2.

Recent lettings include the following:

There are currently 306,579 sq m (3.3 million sq ft) of active requirements for office space in the Dublin market.

The total office vacancy rate in greater Dublin continues to fall and currently stands at 9% . In the CBD (Dublin 2/4) the vacancy rate is 5-6% (depending on specific boundaries) of which Grade A vacancy (% of Grade A stock) is 3.7% and Grade A vacancy (% of total Dublin 2/4 stock) is 2%. The overall vacancy rate in the south suburbs is currently 6.7%.

With the backdrop of continued momentum in tenant demand, and limited new stock being delivered, office rents continue to increase. At 30th June 2014 prime headline rents were in the order of €484 per square metre (€45 per square foot) while today they are at €565 per square metre (€52.50 per square foot), an increase of over 17% in 12 months. There are some floor by floor lettings achieving €592 per square metre (€55 per square foot). The recent pre- letting of "LXV" a new development under construction on St.Stephen's Green in Dublin 2, due to be completed in Q1 2016 at €645 per square metre (€60 per square foot) would suggest that Dublin prime office rents have further to go and various commentators are suggesting €592 per square metre (€55 per square foot) will be the market standard by year end.

Retail

The retail sector continues to improve. Falling unemployment, the emergence of wage growth in the private sector, low interest rates and modest tax reductions are bringing continued confidence to the consumer. While households remain in deleveraging mode and the savings rate is high relative to the long run average, it has started to reduce. At the peak of the crisis in Q4 2009 the savings rate was 16.7% compared to the long run average of 9.8% and as at Q4 2014 it stood at 11%.

Consumer spending has seen 18 successive months of annual growth in retail sales. From January to May 2015 car sales were up 26.9% year on year and retail sales were up 7.8% year on year by April 2015. Looking forward the consumer is expected to make a growing contribution to the domestic recovery over the next two years, leading to forecast spending growth of 2.6% in both 2015 and 2016 which in turn will aid the recover in the retail sector.

Good tenant demand is recorded for prime Dublin high streets and shopping centres/retail parks and over the last 6 months there is evidence of growing demand for good provincial shopping centres and high street locations. In the retail warehouse sector there is currently good demand for well located units of 465 square metre or less and for large units over 1,394 square metre (15,000 sq ft)

Recent new lettings include HMV and Pandora on Grafton Street, Jigsaw on South Anne Street, iConnect on Henry Street, HMV on College Green and ToysRUs in West End retail park. Retailers looking for new space include; Quiz Fashions, Inglot, Maxi Zoo, TK Maxx, Weatherspoons and Boots, to name a few. Outside of Dublin, active letting requirements include ToysRUs, Maxi Zoo, Homestore & More, Dealz (Poundland), Trespass and Tiger.

With spending up and tenant demand increasing there is an expectation from commentators that there will be a movement in retail rental values in the coming months.

Industrial

Activity in the industrial sector has been improving steadily from a low ebb. Take-up of industrial space (which includes sales to owner occupiers and lettings) at the half year point was 184,428 square metres (1,985,164 sq ft) and year to date, take up is 225,556 square metres ( 2,427,870 sq ft) which is three times higher than the same period last year, which was a very poor period in the market. Typically in the industrial sector a large proportion (72%) of this activity is as a result of industrial property being sold for owner occupation.

On the leasing side, rents are now at €70 per square metre (€6.50 per square foot) and are forecast to be €75 per square metre (€7 per square foot) by year end. Almost half of the activity is focused on smaller units of 1,859-4,645 square metre (20,000-50,000 sq ft). That said, 14% of activity in H1 was accommodation of over 9,290 square metre (100,000 sq ft)

There is a strong pipeline of demand from owner occupiers and tenants and with no new development, supply of modern industrial space continues to dwindle. Overall the demand/supply fundamentals are set to see continuing improvements in rents for the best units over the next 6-12 months. 

Development

There is currently 182,623 square metres (1.96 million sq ft) of gross office area, under construction in 19 projects in central Dublin. Approximately 17% of these projects are refurbishments, with the remainder new build or redevelopment projects. Of the schemes under construction at present, 38% have been pre-let. The graph below produced by CBRE identifies in purple those schemes under construction and when they are likely to be completed, and makes a best estimate of when schemes that are yet to commence or are within the planning process may be completed. While it is difficult to gauge development starts, it is clear from this graph that there will be no meaningful supply added until 2017/2018.

http://www.rns-pdf.londonstockexchange.com/rns/2001Y_-2015-9-4.pdf

The graph below (produced by Savills) considers the net addition to office stock from the next development cycle. Their projections are similar to CBRE above, suggesting most development completions will occur from 2017 onwards. As with CBRE, the Savills data is only considering those schemes within the planning process, so looking beyond 2018, starts to become very speculative. Looking at the purple line in their graph, the actual total office stock is set to fall for the next two years as older buildings are withdrawn from the market to clear sites for new development.

http://www.rns-pdf.londonstockexchange.com/rns/2001Y_2-2015-9-4.pdf

Assuming all projected schemes in this graph are complete by 2018, the resultant increase in the total CBD stock could be in the order of 25% by 2018. Whilst this compares favourably to previous development boom cycles as detailed in the table below, it is nonetheless a significant addition to the Dublin market and will need sustained FDI and take up domestically for it to be absorbed without a substantial rental adjustment.

(Source Lisney/Goodbody)

The graph below (Savills) shows the total existing stock in Dublin 2 and Dublin 4 (excluding the areas covered by the Docklands special development zone (SDZ) and the stock currently in the Docklands. They have looked at the pipeline of development and this graph assumes everything currently proposed will get developed. It then highlights the net additional space in each submarket. The impact on the Docklands area is most dramatic with potentially 67% net additional office space in this area. It is important however to note that NAMA currently controls 75% of the lands within the Docklands SDZ (approximately 325,160 square metre/3.5 million sq ft) and they have stated that it will take 5-7 years to bring all the sites in this area to the market. They are nonetheless looking to take in joint venture partners on a selection of their major land holdings which may alter the decision making process somewhat. On their own holdings which they control outright, it is reasonable to assume that this stock will be delivered in a managed basis.

http://www.rns-pdf.londonstockexchange.com/rns/2001Y_1-2015-9-4.pdf

In addition, it is estimated that in the suburbs there could be delivery of a further 154,100 square metre (1.65 million sq. ft.) of net office accommodation from 2015 to 2018.

It is assumed in this data, that those developing have access to finance/funding to commence each project as soon as possible. In reality there is limited and costly development finance available for speculative development. Those projects that are currently under construction are typically being funded by corporate facilities (where available), equity or by forward funding with an institutional investor. While it is likely that further funding routes will open up over time, the lack of current funding options has delayed commencement of a number of projects and may extend the delivery timetable for completed schemes.

__________________________________________________________________________________

References

§ CBRE Research Reports& Research department

§ JLL Market Reports 2014-2015

§ Savills office development research 2015 & Research department

§ SCSI/IPD Ireland Quarterly Property Index

§ Investec Irish Economy Monitor Q2 2015

§ Goodbody Irish Economy Q2 2015

§ Davy Irish Economy June 2015

§ IDA

§ Central Statistics Office

§ HWBC - Office Take-Up analysis & office market research

§ Lisney - Office Market Research

PORTFOLIO OVERVIEW

1. LOCATION

As at 30th June 2015 95% of the portfolio is located in Dublin city centre and greater Dublin with the remaining 5% located in Limerick and rest of Ireland. This is in line with the Company's investment strategy to build a portfolio which would be predominantly Dublin/greater Dublin and selectively Cork, Limerick and Galway. We have contracted to buy an office building in Cork and are due to close in Q1 2016, which is again in line with this strategy.

LOCATIONS BY VALUE *

* Net of costs. Valuation as at 30 June 2015

2. SECTOR SPLIT

The portfolio is split 75% offices, 20% retail, 1% industrial and 4% other (including residential, car park and a hotel/leisure centre) by value. Again this is in line with our investment strategy of building a portfolio comprising predominantly offices (60-70%), up to 25% retail and up to 15% industrial. Our position in being a little ahead of the suggested office weighting is intentional, in that we believed that Dublin offices would perform best as a sector, which is proving to be the case. With regard to the weighting of industrial property, we have now commenced development at Horizon Logistics Park where the land is zoned for logistics warehousing and has capacity for up to 1 million square feet of future development. Over time our allocation to the industrial sector will increase as we expand the park.

SECTORS BY VALUE *

* Net of costs. Valuation as at 30 June 2015

3. RENT & ERV

The passing rent by sector is broadly consistent with the portfolio split, with 73% of our income as at 30th June 2015 coming from offices, 23% from retail and the remaining 4% from industrial/other.

RENTAL INCOME

*Includes car spaces to give portfolio position

The total contracted rent as at 30th June 2015 is €55.7 million which compares to the valuers' ERV (for leased space only) as at the same date of €55.1 million per annum. Within the retail portfolio there remains an amount of over renting as this sector has only started to turn the corner and rental growth is yet to emerge. The contracted rent from the retail element is €12.5 million per annum (average €19.30 per sq. ft.) compared to an ERV of €9.6 million per annum (average €14.80 per sq. ft.). On the office side the Dublin CBD portfolio currently has a contracted rent of €26.6 million per annum (average €39.10 per sq. ft.) compared to an ERV of €28.9 million (average €42.10 per sq. ft.), suggesting there is further reversionary potential from the office element of the portfolio.

CONTRACTED RENTS VERSUS ESTIMATED RENTAL VALUES (ERVs) *

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

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

4. TENANT BUSINESS SECTORS

The portfolio has a diversified income base with a high quality tenant mix. As at 30th June 2015, 98% (measured by ERV) of the portfolio was occupied and the table below shows that our top 10 tenants account for 48% of the annual contracted rent. The top ten tenants include the Irish government, Vodafone, Pioneer, Invesco Global AM and Northern Trust.

TOP 10 OCCUPIERS BY CONTRACTED RENT

*Excluding residential component in Arena Centre

CONTRACTED RENT BREAKDOWN BY TENANT BUSINESS SECTORS

5. WAULT

The weighted average unexpired lease term (WAULT) from the portfolio is 5 years, down from 6 years in 2014. The table below highlights that the retail portfolio has a WAULT of 8.9 years compared to the office portfolio at 3.8 years.

*Excluding residential component in Arena Centre/ Weighted average unexpired lease term to the earlier of next break or expiry (whichever comes first

The portfolio has lease events in 13% of the portfolio in 2016 and 23% of the portfolio in 2017, providing an opportunity to negotiate with tenants and extend the unexpired term.

Principal Risks

The Board takes the view that adequately identifying and managing the risks to achieving our strategic objectives is key to the successful delivery of shareholder returns. 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

Financial Statements

Green REIT plc

Consolidated statement of comprehensive income

for the year ended 30 June 2015

Green REIT plc

Consolidated statement of financial position

as at 30 June 2015

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

Green REIT plc

Consolidated statement of changes in equity

for the year ended 30 June 2015

The accompanying notes are an integral part of these financial statement

Green REIT plc

Consolidated statement of cash flows

for the year ended 30 June 2015

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

Notes to the Financial Statements

Green REIT plc

Notes

forming part of the consolidated financial statements

1 Basis of preparation and significant accounting policies

The financial information in this announcement was approved by the Board of Directors on 7 September 2015 and does not comprise statutory financial statements for the year ended 30 June 2015, within the meaning of the Companies Acts 2014. The statutory financial statements for the year to 30 June 2015 will be finalised based on the financial information presented in this preliminary announcement and will be delivered to the Companies Registration Office in due course.

Statement of compliance

These unaudited consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union (EU IFRS), which comprise standards and interpretations approved by the International Accounting Standards Board (IASB), and the Companies Act 2014.

A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 30 June 2015, and have not been applied in preparing these consolidated financial statements. The items that may have relevance to the Group are as follows:

· Annual Improvements to IFRSs 2010-2012 cycle (effective date 1 February 2015)

· Annual Improvements to IFRSs 2012-2014 cycle (effective date 1 January 2016) *

· IAS 1 (amended) - Presentation of financial statements (effective date 1 January 2016)*

· IAS 27 (amended) - Separate financial statements (effective date 1 January 2016)*

· IFRS 10 (amended) - Consolidated financial statements (effective date 1 January 2016)*

· IFRS 11 (amended) - Joint arrangements (effective date 1 January 2016)*

· IFRS 15 - Revenue from contracts with customers (effective date 1 January 2018)*

· IFRS 9 - Financial Instruments (effective date 1 January 2018)*

* Not EU endorsed at the time of approval of these financial statements

The Group is in the process of assessing the impact of the new standards and interpretation on its financial reporting and currently intends to apply the new requirements once they are endorsed by the EU.

The accounting policies set out below have been applied to the consolidated financial statements.

Notes to the Financial Statements

Green REIT plc

Notes

forming part of the consolidated financial statements

1 Basis of preparation and significant accounting policies (continued)

Going concern

The Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future and that it is appropriate to prepare the consolidated financial statements on a going concern basis.

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for investment properties, short term investments and derivatives, which are measured at fair value.

Functional and presentation currency

The financial information is presented in Euro, which is the Company's functional currency. All financial information presented in Euro has been rounded to the nearest thousand except when otherwise indicated.

Underlying pre-tax earnings

The European Public Real Estate Association (EPRA) has issued Best Practices Recommendations, the latest update of which was issued in December 2014, which give guidelines for performance measures. EPRA Earnings is the profit after tax excluding investment and development property revaluations and gains or losses on disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation. Underlying earnings consists of the EPRA Earnings measure.

Use of estimates and judgements

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.

Information about critical judgements in applying accounting policies that have the most significant effect on amounts recognised in the consolidated financial statements is included in the accounting policies and the notes to the financial statements.

The key accounting judgement and estimate in these financial statements is the valuation of the property portfolio. This is discussed in further detail under the accounting policy for property valuation and in note 8.

Measurement of fair values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

A number of the Group's accounting policies and disclosures require the measurement of fair values. When measuring the fair value of an asset or liability the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Group.  The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. The financial information of subsidiaries is included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

Joint arrangements

Under IFRS 11, Joint Arrangements, the Group classifies its interests in joint arrangements as either joint operations or joint ventures depending on the Group's rights to the assets and obligations for the liabilities of the arrangements. When making this assessment, the Group considers the structure of the arrangements, the legal form of any separate vehicles, the contractual terms of the arrangements and other facts and circumstances.

When the Group has rights to the assets and obligations to the liabilities, relating to an arrangement, it accounts for each of its assets, liabilities and transactions, including its share of those held or incurred jointly, in relation to the joint operation.

When the Group has rights only to the net assets of an arrangement, it accounts for its interest using the equity method. Investments in joint ventures are accounted for using the equity method and are recognised initially at cost. The cost of such investments includes transaction costs.

1 Basis of preparation and significant accounting policies (continued)

Basis of consolidation (continued)

Accounting policy alignment and transactions elimination on consolidation

Accounting policies of subsidiaries or joint ventures which differ from those of the Group are adjusted for when preparing consolidated financial statements.

All intra-group transactions, balances, income, unrealised gains, losses and expenses are eliminated on consolidation. Unrealised gains arising from transactions with joint ventures are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same manner as unrealised gains, save where the Group considers that an impairment provision maybe warranted.

Investment properties

Investment property is property held either to earn rental income, or for capital appreciation (including future re-development) or for both, but not for sale in the ordinary course of business. The Group does not have any properties held for resale or trading purposes.

Investment property is initially measured at cost including related acquisition costs and subsequently valued by professional external valuers at their respective fair values at each reporting date. The difference between the fair value of an investment property at the reporting date and its carrying value prior to the external valuation is recognised in profit or loss as a fair value gain or loss.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.

Properties leased out to tenants under operating leases are included in investment property in the statement of financial position.

Investment properties are treated as acquired at the point where the Group assumes the significant risks and returns of ownership which normally occurs when the conveyancing contract has been performed by both buyer and seller and the contract has been deemed to have become unconditional and completed. Investment properties are deemed to have been sold when the buyer has assumed the risks and rewards of ownership and the contract has been completed.

Additions to investment properties consist of construction and other directly attributable costs such as professional fees and expenses and in the case of investment properties under development capitalised interest where applicable. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs. Where the Group begins to redevelop an existing investment property the property continues to be held as an investment property.

Properties that are currently being developed or that are to be developed in the near future are held as development properties. These properties are initially valued at cost. Any direct expenditure on development properties is capitalised and the properties are then valued by external valuers at their respective fair value at each reporting date.

1 Basis of preparation and significant accounting policies (continued)

Investment property (continued)

The cost of properties in the course of development includes attributable interest and other associated outgoings. Interest is calculated on the development expenditure by reference to specific borrowings, where relevant, and otherwise on the average rate applicable to short-term loans. Interest is not capitalised where no development activity is taking place. A property ceases to be treated as a development property on practical completion.

External, independent valuers, having appropriate recognised and relevant professional qualifications and recent experience in the location and category of property being valued, value the Group's property portfolio at each reporting date, in accordance with the Royal Institution of Chartered Surveyors Valuation Standards (RICS).

Critical accounting judgements and key estimations of inherent uncertainty in investment property valuations

The fair values derived are based on anticipated market values for the properties, being the estimated amount that would be received to sell the assets in an orderly transaction between market participants.

The valuation of the Group's investment property portfolio is inherently subjective as it requires among other factors, assumptions to be made regarding the ability of existing tenants to meet their rental obligations over the entire life of their leases, the estimation of the expected rental income in to the future, an assessment of a property's ability to remain as an attractive technical configuration to existing and prospective tenants in a changing market and a judgement to be reached on the attractiveness of a building, its location and the surrounding environment. While these and other similar matters are market standard considerations in determining the fair value of a property in accordance with the RICS methodology they are all subjective assessments of future outturns and macro-economic factors which are outside of the Group's control or influence and therefore may prove to be inaccurate long term forecasts.

As a result of all of these factors the ultimate valuation the Group places on its investment properties is subject to some uncertainty which may not turn out to be accurate, particularly in times of macro-economic volatility.

The RICS property valuation methodology is considered by the Board to be the valuation technique most suited to the measurement of the fair value of property investments. It is also the primary measurement of fair value that all major and reputable property market participants use when valuing a property investment.

Rental income

Rental income from investment property is recognised on an accruals basis as revenue on a straight-line basis over the term of the lease. The Group considers this is the most representative systematic time pattern in which the benefits of ownership of the assets will accrue to the business. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

1 Basis of preparation and significant accounting policies (continued)

Rental Income (continued)

Where a rent free period is included as an incentive in a lease the rental income foregone is allocated evenly over the period from the date of the lease to the earliest termination date of the lease. Where a lease incentive takes the form of an incentive payment to a tenant the resultant cost is amortised evenly over the remaining life of the lease to its earliest termination date.

Contingent rents, such as turnover rents, and indexation adjustments are recorded as income in the periods in which they are earned. Rental concessions are recorded as adjustments to income in the rental periods to which the concession relates.

A rent adjustment or review due under a lease which has not yet been settled at the reporting date is included in the results based upon a reasonable estimate of the amount the review will be settled at and then adjusted to actual outcome when the outstanding review is finally established.

Where the Group receives a surrender premium from a tenant for the early termination of a lease, the profit net of any direct costs associated with dilapidation and legal costs relating to that lease, is reflected in the accounting period in which the surrender took place.

Details on all rental incentives are provided to the external valuers for their consideration during their review of the investment property valuation at each reporting date.

Service charge income is recognised in the period in which it is earned.

Finance income and finance costs

The Group's finance income and finance costs comprise interest income, interest expense and related charges. Interest income or expense is recognised using the effective interest method.

Tax

Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse using tax rates enacted or substantively enacted at the reporting date.  

1 Basis of preparation and significant accounting policies (continued)

Financial instruments

Non-derivative financial assets

The Group initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated as at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets. At 30 June 2015 the Group had the following non-derivative financial assets, which are classified as loans and receivables:

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.

Short term investments

Short term investments represent investments in high quality investment grade money market fund portfolios comprised of money market instruments, short-term bond securities, repurchase agreements and cash and cash equivalents, with maturities ranging from 1 day to 12 months in duration.

Trade and other receivables

Trade and other receivables are initially recognised at fair value, which is usually the original invoiced amount and subsequently carried at amortised cost using the effective interest method less provision made for impairment, if applicable.

The fair values of trade and other receivables are estimated at the present value of future cash flows, discounted at the market rate of interest at the measurement date. Short-term receivables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, where appropriate for disclosure purposes.

Non-derivative financial liabilities

All financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument and are measured initially at fair value less initial direct costs and subsequently measured at amortised cost.

1 Basis of preparation and significant accounting policies (continued)

Financial instruments (continued)

Non-derivative financial liabilities (continued)

Fair value is calculated, for period end disclosure purposes, based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the measurement date.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

Derivative financial instruments

Derivatives are recognised initially at fair value; any directly attributable transaction costs are recognised in profit or loss as they are incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.

Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from the share premium account included in equity.

Share based payments - performance fee

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

2 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 (an equity accounted investee) is presented on a proportional consolidation basis.

2. Operating segments (continued)

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

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

Information related to each reportable segment is set out below:

2. Operating segments (continued)