GRN.L Regulatory News (GRN)

PRELIMINARY RESULTS FOR THE YEAR TO 30 JUNE 2019

Dublin, 14 August, 2019 - Green REIT plc, ("Green REIT" or the "Company"), the Irish property investment company, today announces its results for the year ended 30 June 2019.

KEY FINANCIALS

* Includes fair value movements on the Company's investment properties

**Please see note 9. The Company will be required, subject to remaining within the Irish REIT regime, to pay a further dividend by 31 March 2020 to bring the total dividend in respect of the year to 30 June 2019 to the minimum 85% payout level.

Portfolio Update

·; Contracted annual rent of €79.4 million at 30 June 2019 (30 June 2018: €71.7 million), or €83.0 million when rental income from lettings with terms agreed are included

·; WAULT of 8.5 years (30 June 2018: 8.8 years)

·; EPRA vacancy rate of 5.7% (30 June 2018: 4.4%), or 1% when lettings with terms agreed are also included

·; Portfolio now comprises 87% offices, 9% logistics and 4% mixed use, by value

·; Terms agreed for the retail space at One Molesworth Street, at an annual rent of €505,000, which will bring the building to full occupancy, delivering a total rent of €5.85 million per annum

·; Building I in Central Park completed in April 2019. Genesis Aircraft Services have signed a lease for the top two floors of the building (2,410 square metres (25,941 square feet)), for 20 years and with a tenant break at year 12. The Company has recently agreed terms with a party for the balance of Building I, extending to 7,260 square metres (78,117 square feet). Subject to completion of this lease, the total annual rent from Building I will be approximately €3.5 million, 13% ahead of our most recent annual rent projection in February 2019 of €3.1 million.

Development Update

·; Bunzl unit (10,700 square metres (115,000 square feet)) at Horizon Logistics Park commenced in February 2019 and is due for completion in Q1 of 2020 with an annual rent of €1.14 million

·; Kuehne+Nagel triggered their options for an extension to the unit delivered to them in Horizon Logistics Park in April 2018 by 7,400 square metres (80,000 square feet), which is under construction and due for completion in Q1 of 2020. The annual rent on the extension will be approximately €0.71 million, subject to final measurement when built, with no rent free period

·; Agreement signed with Vortex Aviation for unit D4 at Horizon Logistics Park at an annual rent of €0.43 million, on 4,160 square metres (44,800 square feet), for 20 years with first tenant break at year 10, and with nine months' rent free. Vortex Aviation is an aircraft maintenance company and part of the Kellstrom Group (US)

·; The completion of the units under construction at Horizon Logistics Park will bring the total number of units to 13, increasing the annual contracted rent to €6.5 million, or to €7.0 million including units D6 and D7 (on the assumption that they are leased at their current ERVs)

·; Planning consent granted in June 2019 for a 15,300 square metre (165,000 square feet) unit at Horizon Logistics Park

·; Planning application submitted in July 2019 for 47,364 square metres (509,826 square feet) of new office space over three new blocks at Central Park, in excess of previous estimate of 37,200 square metres (400,000 square feet) of lettable space

Gary Kennedy, Chairman of Green REIT plc, commented: "This has been another year of growth in our rental income and underlying earnings, with further positive contributions from our development schemes and asset management initiatives to the Company's income base. Our contracted annual rent is now up to €79.4 million, or €83.0 million when lettings from lease deals with terms agreed are included, representing an increase of 10% on the last reported contracted annual rent on 31 December 2018 of €75.5 million."

RECOMMENDED OFFER

As noted in the Sales Process Update announcement dated 31 July 2019, the independent committee of the Board entered into discussions with an affiliate of Henderson Park Capital Partners UK LLP (which together with its affiliates shall be referred to as "Henderson Park") regarding a possible offer to be made by Henderson Park for the issued, and to be issued, share capital of Green REIT.

The independent committee of the Board of Green REIT has now reached agreement with Henderson Park, on the terms of a recommended cash offer pursuant to which HPREF Dublin Office Bidco Limited ("Bidco"), an indirect wholly owned subsidiary of the Henderson Park Funds, will acquire the entire issued and to be issued share capital of the Company. Consequently, Bidco will imminently announce a firm intention to make an offer for Green REIT under Rule 2.5 of the Irish Takeover Rules.

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.

This announcement contains inside information. The person responsible for arranging for the release of this announcement on behalf of Green REIT is Niall O'Buachalla, Company Secretary. The date and time of this announcement is the same as the date and time it has been communicated to the media.

Responsibility statement

The directors of Green REIT accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the directors (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

Dealing disclosure requirements

Under the provisions of Rule 8.3 of the Irish Takeover Panel Act 1997, Irish Takeover Rules 2013 (the "Irish Takeover Rules"), if any person is, or becomes, 'interested' (directly or indirectly) in, 1% or more of any class of 'relevant securities' of Green REIT, all 'dealings' in any 'relevant securities' of Green REIT (including by means of an option in respect of, or a derivative referenced to, any such 'relevant securities') must be publicly disclosed by not later than 3.30pm (Irish/UK time) on the 'business' day following the date of the relevant transaction. This requirement will continue until the date on which the 'offer period' ends. If two or more persons cooperate on the basis of any agreement, either express or tacit, either oral or written, to acquire an 'interest' in 'relevant securities' of Green REIT, they will be deemed to be a single person for the purpose of Rule 8.3 of the Irish Takeover Rules.

A disclosure table, giving details of the companies in whose 'relevant securities' 'dealings' should be disclosed, can be found on the Irish Takeover Panel's website at www.irishtakeoverpanel.ie.

Interests in securities arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Irish Takeover Rules, which can also be found on the Irish Takeover Panel's website. If you are in any doubt as to whether or not you are required to disclose a dealing under Rule 8, please consult the Irish Takeover Panel's website at www.irishtakeoverpanel.ie or contact the Irish Takeover Panel on telephone number +353 1 678 9020.

Further Information

In accordance with Rule 19.9 of the Irish Takeover Rules, a copy of this announcement will be available on the Company's website at www.greenreitplc.com by no later than 12 noon on the business day following this announcement. The content of any website referred to in this announcement is not incorporated into, and does not form part of, this announcement.

This announcement is not intended to, and does not, constitute or form part of (1) an offer or invitation to purchase or otherwise acquire, subscribe for, tender, exchange, sell or otherwise dispose of any securities, (2) the solicitation of an offer or invitation to purchase or otherwise acquire, subscribe for, tender, exchange, sell or otherwise dispose of any securities, or (3) the solicitation of any vote or approval in any jurisdiction, pursuant to this announcement or otherwise.

The release, publication or distribution of this announcement in, into, or from, certain jurisdictions other than Ireland and the United Kingdom may be restricted or affected by the laws of those jurisdictions. Accordingly, copies of this announcement are not being, and must not be, mailed or otherwise forwarded, distributed or sent in, into, or from any such jurisdiction. Therefore persons who receive this announcement (including without limitation nominees, trustees and custodians) and are subject to the laws of any jurisdiction other than Ireland and the United Kingdom who are not resident in Ireland or the United Kingdom will need to inform themselves about, and observe any applicable restrictions or requirements. Any failure to do so may constitute a violation of the securities laws of any such jurisdiction.

J.P. Morgan Securities plc (which conducts its UK and Ireland investment banking business as J.P. Morgan Cazenove) is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated by the PRA and the Financial Conduct Authority. J.P. Morgan Cazenove is acting as financial adviser exclusively for Green REIT and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Green REIT for providing the protections afforded to clients of J.P. Morgan or its affiliates, or for providing advice in relation to any matter referred to herein.

J&E Davy ("Davy"), which is authorised and regulated in Ireland by the Central Bank of Ireland, is acting exclusively for Green REIT and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Green REIT for providing the protections afforded to clients of Davy or for providing advice in connection with the matters referred to in this announcement.

No statement in this announcement is intended to constitute a profit forecast for any period, nor should any statements be interpreted to mean that earnings or earnings per share will necessarily be greater or lesser than those for the relevant preceding financial periods for the Company. No statement in this announcement constitutes an estimate of the anticipated financial effects of an acquisition of the Company, whether for the Company or any other person. Copies of the valuation opinions required under Rule 29.1(a) of the Irish Takeover Rules in relation to any asset valuations contained in this announcement will be contained in the firm offer announcement to be issued by Bidco.

Green REIT plc

Consolidated statement of comprehensive income

Green REIT plc

Consolidated statement of financial position

as at 30 June

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

Green REIT plc

Consolidated statement of changes in equity

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

Green REIT plc

Consolidated statement of cash flows

for the year ended 30 June

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

Green REIT plc

Notes

Notes to the Financial Statements

1 Basis of preparation and significant accounting policies

Basis of preparation

The financial information in this announcement was approved by the Board of Directors on 14 August 2019 and does not comprise statutory financial statements for the year ended 30 June 2019, within the meaning of the Companies Acts 2014. The financial information has been derived from the group financial statements for the year ended 30 June 2019, which will be finalised, reported on by the auditors, published on the Group's website and filed with the Companies Registration Office in due course.

These consolidated unaudited financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, which comprise standards and interpretations approved by the International Accounting Standards Board, and the Companies Act 2014. All accounting policies are consistent with the prior year as detailed in the 2018 annual report, with the exception of the adoption of IFRS 9 and IFRS 15, which did not have a material impact.

3 Sales process costs

Sales process costs are legal and professional costs relating to the ongoing sales process and are of a non-routine nature.

In the case of a successful conclusion to the sales process the financial advisors of the Company will be entitled to a success fee.

Green REIT plc

Notes (continued)

The market value of the Group's investment properties, as determined by the Group's external valuers, differs from the value presented in the balance sheet due to the Group presenting tenant lease incentives separately.

The €67 million reclassification between development property and investment property relates mainly to Building I in Central Park, with the remainder relating to a number of units in Horizon Logistics Park. 

Green REIT plc

Notes (continued)

The derivative financial asset represents interest rate hedges entered into in respect of the Group's borrowings.

7 Trade and other receivables

Green REIT plc

Notes (continued)

8 Share capital

On 5 October 2018, the Company issued 5,114,736 shares to the Investment Manager. These shares were issued to meet the Company's obligation with respect to the performance fee payable in respect of the year ended 30 June 2018.

9 Dividends

In accordance with the Irish REIT regime, the Group is required, subject to having sufficient distributable reserves, to distribute to its shareholders (by way of dividend), at least 85% of the Property Income of the Property Rental Business arising in each Accounting Period. For the year ended 30 June 2019 the Property Income of the Property Rental Business of the Group is calculated as follows:

The Board declared a dividend on 18 September 2018, in respect of the year to 30 June 2018, of 2.7 cent per share, or €18.7 million, which was paid on 19 October 2018, bringing the total dividends paid for that year to 5.3 cent per share, or 100% of the Property Income. On 1 April 2019 the Company paid a dividend of 2.8 cent per share, or €19.6 million, in respect of the six months to 31 December 2018. The Company will be required, subject to remaining within the Irish REIT regime, to pay a further dividend by 31 March 2020 to bring the total dividend in respect of the year to 30 June 2019 to the minimum 85% level set out above.

Green REIT plc

Notes (continued)

10 Earnings per share

Basic and diluted earnings per share

Profit attributable to ordinary shareholders

Weighted average number of ordinary shares

Green REIT plc

Notes (continued)

11 Net asset value per share

EPRA NAV per Share excludes the net mark to market adjustment to the value of financial instruments which are used for hedging purposes and where the Company has the intention of keeping the hedge position until the end of the contractual duration and is calculated on a fully diluted basis. 

Green REIT plc

Notes (continued)

13 Borrowings

The increase in borrowings during the period is as a result of drawdowns to fund the ongoing development capital expenditure programme.

Green REIT plc

Notes (continued)

14 Subsequent events

On 15 April 2019, the Board of the Company announced that, following a comprehensive and carefully considered review of the strategic options available to the Company to maximise value for its shareholders, it had taken a decision to initiate a process for the sale of the Company or its portfolio of assets. This was primarily due to the persistent and structural discount in its share price relative to its underlying net asset value. Initial proposals were received based upon publicly available information, with selected interested parties invited to carry out further due diligence and submit "best and final" bids no later than Thursday 25 July 2019. Having assessed the bids received as part of the sales process in detail, with the assistance of its advisers, the Company announced on 31 July 2019 that an independent committee of the Board had entered into discussions with an affiliate of Henderson Park Capital Partners UK LLP ("Henderson Park") regarding a possible offer to be made by Henderson Park for the issued, and to be issued, share capital of the Company. The completion of any offer would be subject to customary conditions for an offer for an Irish public company. The independent committee of the Board has now reached agreement with Henderson Park, on the terms of a recommended cash offer pursuant to which HPREF Dublin Office Bidco Limited ("Bidco"), an indirect wholly owned subsidiary of the Henderson Park Funds, will acquire the entire issued and to be issued share capital of the Company. Consequently, Bidco will imminently announce a firm intention to make an offer for Green REIT under Rule 2.5 of the Irish Takeover Rules.

15 Capital commitments

The Group has entered into a number of development contracts to develop buildings at various locations. The total capital commitment, for contracts entered into at the 30 June 2019, over the next 12 to 24 months is €26.8 million.

16 Contingent liabilities

As stated in Note 3 (Sales Process Fees), the financial advisors of the Company will be entitled to a success fee upon completion of a sale of the Company.

17 Related party transactions

(a) Subsidiaries

The Company's subsidiaries are detailed in the 2018 Annual Report.

The Company transacts with its 100% owned and controlled subsidiaries and has provided them with the necessary funding to facilitate the acquisition of the assets that now form part of the Group's overall assets. 

(b) Investment Manager - Green Property REIT Ventures DAC

Green Property REIT Ventures DAC is a related party by virtue of providing key management services to the Company. These services are set out in the IMA entered into on 12 July 2013.

Investment Manager role and responsibilities

The Investment Manager identifies possible property acquisitions for, and opportunities with a view to investment by, the Company by reference to the Company's investment policy and strategy and will be entitled to consult with professional advisers to assist it. Further information is included in our annual report.

Green REIT plc

Notes (continued)

17 Related party transactions (continued)

(b) Investment Manager - Green Property REIT Ventures DAC (continued)

Base fee

The base fee is paid to the Investment Manager in cash quarterly in arrears. The base fee in respect of each quarter is calculated by reference to 1% per annum of EPRA NAV for that quarter. The total base fee earned by the Investment Manager in the period amounted to €12.8 million (2018: €11.8 million). 

Performance fee

The performance fee is designed to incentivise and reward the Investment Manager for generating returns to shareholders. Further information is included in the 2018 annual report.

No performance fee (2018: €7.7m) was earned for the year ended 30 June 2019 as the required hurdle was not reached.

Shareholding

At 30 June 2019, Green Property REIT Ventures held 32,499,942 ordinary shares in the Company. These shares were issued in full settlement of the performance fees for the years to 30 June 2015, 2016, 2017 and 2018.

(c) Directors and key management personnel

The key management personnel of the Company are its Directors. During the year to 30 June 2019, the Company incurred Directors' fees, including taxes and expenses of €0.45 million (2018: €0.3 million). There is no other Director or key management compensation paid by the Company.

APPENDIX - EPRA PERFORMANCE MEASURES

Forward-looking Statements

This preliminary announcement may contain certain 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.