HBRN.L Regulatory News (HBRN)

Hibernia REIT plc Trading Update

13 February 2019

Hibernia REIT plc ("Hibernia" or the "Group") today issues a trading update relating to the period from 1 October 2018 to date.

Highlights

· Portfolio value up 2.5%1 to €1,410.9m at 31 December 2018, resulting in EPRA NAV per share of 170.1 cent, a final performance fee2 of €5.4m and a final base fee top-up3 of €1.5m

· 1 Sir John Rogerson's Quay ("1SJRQ") and 2 Windmill Lane ("2WML") developments are expected to complete in February 2019; 1SJRQ offices fully let to HubSpot

· Final grants of planning permission received for a 315,000 sq. ft. redevelopment of Harcourt Square and for a refurbishment and extension of Marine House to 49,000 sq. ft.

· Successful refinancing completed, moving all debt funding from secured to unsecured basis and extending weighted average maturity from 1.9 years to 5.7 years4

Occupational market update

Following a strong final quarter, the Dublin office leasing market set a new record in 2018, with 3.9m sq. ft. taken up. As in 2017, the technology, media and telecoms sector accounted for over 50% of space let and the headline figures included a number of very large lettings. Levels of active demand remain high. The office vacancy rate at 31 December 2018 was 4.6% for Grade A space in central Dublin and 6.1% overall. Prime Grade A headline rents in the city centre are stable at in excess of €60 per sq. ft. (source: Knight Frank).

Net asset value / expiry of Investment Management Agreement ("IMA")

The five year term of the IMA between Hibernia and WK Nowlan REIT Management Ltd (its former Investment Manager) expired on 26 November 2018 and the Group's new Remuneration Policy, which was approved by shareholders at the Annual General Meeting in July 2018, is now in effect. In order to calculate any fees due for the final period of the IMA from 1 April 2018 until its expiry, the property portfolio was valued by Cushman & Wakefield as at 31 December 2018 and Hibernia has produced accounts to the same date.

The value of the portfolio increased 2.5%1 from 30 September 2018 to €1,410.9m as at 31 December 2018, in particular due to gains following the letting of 1SJRQ. EPRA NAV per share at the same date was 170.1 cent, up 2.3% from 166.3 cent at 30 September 2018. Pro-rating to 26 November 2018 this resulted in a final performance fee2 of €5.4m and a final base fee top-up3 of €1.5m, both payable mainly in shares once the audit of the accounts for year ended 31 March 2019 is completed using a share price of 135.1 cent, being the average closing price for the 20 trading days ending 26 November 2018.

Acquisitions and disposals

In November 2018 Hibernia acquired 92.5 acres of land at Newlands Cross, D24, from the Irish Rugby Football Union for initial consideration of €27m, taking Hibernia's interest in the area to 143.7 acres. The land is situated within eight kilometres of Dublin's city centre, has excellent transport links and significant potential for mixed-use development. No disposals were made in the period.

Developments and refurbishments

The letting of 1SJRQ to HubSpot was agreed in November 2018: the 20 year lease will commence in June 2019 and the building is expected to reach practical completion in February 2019. Work at 2WML is also expected to complete in February 2019 and discussions with potential occupiers continue. Construction work on Cumberland Place Phase II commenced in October 2018 and completion remains scheduled for the first half of 2020.

In November 2018 Hibernia received planning permission for a 315,000 sq. ft. scheme at Harcourt Square, an increase from the previous planning approval for a 277,000 sq. ft. scheme, and in December 2018 planning permission was granted for the refurbishment and extension of Marine House, which would take the building to 49,000 sq. ft. from 41,000 sq. ft. in its current form.

Asset management The in-place office portfolio currently stands at 1.0m sq. ft. and has a vacancy rate of c. 3%, based on lettable area: this is likely to increase in the near term, with 2WML (60,000 sq. ft.) close to practical completion and Depfa Bank due to vacate the Forum (47,000 sq. ft.) in March 2019. Nine office rent reviews are outstanding on €2.5m of annual rental income: the ERV for the space is €4.6m. Balance sheet In December 2018 the Group refinanced its €400m secured revolving credit facility with a €320m unsecured revolving credit facility (at a margin of 2.0% over EURIBOR) and €75m of unsecured US private placement notes (average coupon of 2.53%), increasing the weighted average maturity of its debt from 1.9 years to 5.7 years at signing.

At 31 December 2018 Hibernia had net debt of €205m, a loan to value ratio of 14.5%, and cash and undrawn facilities of €115m. Taking into account the US private placement notes which funded in January 2019, committed development spend and payment of the interim dividend, cash and undrawn facilities at 31 December 2018 totalled €137m. 

Kevin Nowlan, Chief Executive Officer of Hibernia, said: "We have made good progress with our development assets in the period, securing the letting of 1SJRQ to HubSpot and receiving new grants of planning for two projects in our pipeline, Harcourt Square and Marine House. This has been reflected in a 2.5% uplift in the portfolio value in the three months to 31 December 2018. In addition, our interest at Newlands Cross has grown to 143.7 acres with the acquisition of a further 92.5 acres of land. "Demand for office space in Dublin remains high and with our significant pipeline of development opportunities, strong balance sheet with long-term funding and experienced management team, Hibernia continues to be well positioned. In the near term, we are focused on letting the space coming available in the portfolio and completing the outstanding rent reviews."  

ENDS

Contacts:

Hibernia REIT plc +353 1 536 9100

Kevin Nowlan, Chief Executive Officer

Tom Edwards-Moss, Chief Financial Officer

Murray Consultants

Doug Keatinge: +353 86 037 4163, dkeatinge@murraygroup.ie

Jill Farrelly: +353 87 738 6608, jfarrelly@murraygroup.ie

About Hibernia REIT plc

Hibernia REIT plc is an Irish Real Estate Investment Trust ("REIT"), listed on Euronext Dublin and the London Stock Exchange. Hibernia owns and develops property and specialises in Dublin city centre offices.