11 Feb 2020 07:00
Hibernia REIT plc Trading Update
Hibernia REIT plc ("Hibernia" or "the Group") today issues a trading update relating to the period from 1 October 2019 to date.
Highlights
·; Lease negotiations advanced on the majority of the vacant space in office portfolio
·; 2 Cumberland Place development on track to complete in Q3 2020: in negotiations with potential tenants regarding most of the available space
Market update
The Dublin office letting market had another highly active fourth quarter, following two relatively quiet quarters, and take-up exceeded 3.3m sq. ft. in 2019 as a whole. While this was lower than 2018, when a record 3.9m sq. ft. was leased, a number of transactions remained outstanding at 31 December 2019, with over 1.3m sq. ft. of space reserved. In addition, active demand at year end stood at 3.8m sq. ft. which should be supportive for the occupational market in 2020. Office vacancy at the end of December 2019 was 6.4% for Grade A space in the city centre (Sep-19: 6.0%) and 8.0% for Dublin overall (Sep-19: 6.8%). Prime Grade A headline rents in the centre of Dublin remained stable at in excess of €60 per sq. ft. (source: Knight Frank).
Investment volumes set a new record in 2019, with over €7.2bn of Irish property transacted (2018: €3.6bn). 44% of this related to office transactions and the office and multifamily sectors together accounted for over 75% of overall volumes. Prime offices in central Dublin continue to transact at yields around 4% and yields for prime multifamily residential assets are around 3.75% (source: Knight Frank/CBRE).
Acquisitions and disposals
We have invested €2.5m in two acquisitions since 30 September 2019, both of which are assets adjoining properties we own. No disposals were made in the period.
Developments and refurbishments
2 Cumberland Place, D2, is on track for completion in Q3 2020 and we are in negotiations with tenants for the majority of the 56,000 sq. ft. of office space in the building. Once the development is complete, there will be in excess of 185,000 sq. ft. of office accommodation on the Cumberland Place site.
Asset management The vacancy rate in our in-place office portfolio remains at 12% (Sep-19 estimated rental value: €7.8m) and is primarily across 2WML, Central Quay and the Forum. We have made good progress in lease negotiations for the majority of the space available and we expect these to start concluding shortly.
Two office rent reviews on 30,000 sq. ft. are outstanding: the expected uplift to Group contracted rent once concluded is c. €0.5m. Share buyback In the period from 1 October to 11 November 2019 4.3m shares were repurchased for aggregate consideration of €6.0m, an average purchase price of €1.41 per share. This completed the €25m share buyback programme originally announced on 2 April 2019. In total 17.6m shares were repurchased and cancelled at an average price of €1.42 per share.
Capital reorganisation The final court date to approve the capital reorganisation to convert some of Hibernia's share premium account into distributable reserves and enhance our flexibility for future capital management has been set for 4 March 2020 and we have applied to convert €50m of share premium into distributable reserves. Balance sheet At 31 December 2019 the Group had net debt of €229m and cash and undrawn facilities of €166m. Net of committed expenditure and the interim dividend of 1.75c per share paid on 23 January 2020, cash and undrawn facilities amounted to €126m.
Kevin Nowlan, Chief Executive Officer of Hibernia, said: "The Dublin office letting market ended 2019 strongly, with a pick-up in demand from tenants of all sizes, after a quieter period in the middle of the year, particularly for smaller occupiers. Levels of active tenant demand remain high and 2020 has started positively. Property investment market volumes set a new record in 2019 though it remains to be seen how the market reacts to the tax changes introduced in the recent Budget.
"We have made good progress with the lease negotiations that are ongoing over much of the available space in the office portfolio and we expect that these will start concluding shortly. We continue to work on advancing our development pipeline and have made two small property acquisitions to enhance the future value of the assets we already own.
"Hibernia remains well-positioned with an extensive development pipeline, low financial leverage and a talented team."
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.