HBRN.L Regulatory News (HBRN)

Hibernia REIT plc Trading Update

Hibernia REIT plc ("Hibernia" or "the Group") today issues a trading update relating to the period from 1 October 2020 to date.

Highlights

Market update

While there was a modest pick-up in the fourth quarter, activity in the Dublin office market remains subdued, as it has been since the start of the COVID-19 pandemic. Office take-up in 2020 amounted to 1.5m sq. ft., down 55% on 2019, with 0.8m sq. ft. of this occurring in the first quarter of the year. Active demand at year end was 2.3m sq. ft., unchanged in the fourth quarter and down 40% in 2020. Office vacancy at year end stood at 8.7% for Grade A space in the city centre (Sep-20: 9.1%) and 9.5% for Dublin overall (Sep-20: 8.9%). Prime Grade A headline rents in central Dublin were €57.50 per sq. ft., unchanged in the fourth quarter and down 8% over the year (source: Knight Frank).

Investment volumes in 2020 totalled €3bn, down 58% on the record prior year: 40% of this related to office transactions, with offices and PRS together accounting for over 78% of overall volumes. Encouragingly, prime offices in central Dublin continue to transact at yields around 4% and yields for prime PRS assets remain around 3.75% (source: Knight Frank/CBRE).

Rent collection  Commercial tenants[1] 98% of rent for the quarter ending 31 March 2021 has been received or is on agreed monthly payment plans and the rent collection statistics remain similar to recent quarters.

Residential tenants[2] At close of business on 10 February 2021 95% of contracted rent for the month had been received and the occupancy rate of our residential units was 93%. At the same point in December 2020 and January 2021, respectively, 97% and 95% of that month's contracted rent had been received and the occupancy rate was 92% and 91%. We have now received over 99% of December and January rent. Asset management The vacancy rate in our in-place office portfolio is 7%[3] (Dec-20 ERV[4]: €3.1m), with the available space primarily in Central Quay and the Forum. Including our near-term development assets where there is some vacancy, Marine House and Clanwilliam Court, the in-place office vacancy rate is 8%. Upon completion, our active development schemes at 2 Cumberland Place and 50 City Quay will add approximately three percentage points to our office vacancy rate, assuming no further lettings.

Since 30 September 2020 we have agreed new leases or lease extensions on 36,000 sq. ft. of office space and 83,000 sq. ft. of industrial space, adding €1.0m of gross rent per annum or €0.3m per annum net of expiries and terminations. In addition, we have completed rent reviews over 30,000 sq. ft. of office accommodation, generating an uplift in contracted rent of €0.6m. Rent reviews over 71,000 sq. ft. of office space are active, though in aggregate these are unlikely to result in material changes in contracted rent.

Acquisitions and disposals 

We have invested €3.8m[5] in two acquisitions since 30 September 2020, both of which are assets adjacent to properties we own and should help enhance the value of our existing portfolio in the longer term. No disposals were made in the period.

Developments and refurbishments

Work on our two active office developments, 2 Cumberland Place (58,000 sq. ft., 40% pre-let to 3M) and 50 City Quay (4,500 sq. ft.), has been halted by the closure of construction sites since early January 2021 as part of national COVID-19 restrictions. Once sites are allowed to re-open (currently expected to be in early March 2021) both schemes should reach practical completion within a few weeks.

Sustainability

We received four stars (out of a maximum five) in the 2020 GRESB Assessment, up from three stars in 2019. We completed the CDP[6] questionnaire for the first time, receiving a B- score. We also received our third successive EPRA Gold Award for the quality of our sustainability performance disclosures.

Share buyback programme In the period from 1 October to 16 November 2020 15m shares were repurchased for aggregate consideration of €16m, completing the €25m share buyback programme announced in August 2020. In total 23.1m shares were repurchased and cancelled under the programme at an average price of €1.08 per share. Balance sheet At 31 December 2020 the Group had net debt of €275m and cash and undrawn facilities of €120m. Net of committed expenditure and the interim dividend of 2c per share paid on 28 January 2021, cash and undrawn facilities amounted to €104m.

In December 2020 the Group entered interest rate caps on €200m of notional debt. These have a strike rate of 0.25% EURIBOR and cover the five-year period to December 2025. The Group's existing interest rate hedging instruments on €125m of notional debt, which have a strike rate of 0.75% EURIBOR, are expected to expire in December 2021. At 31 December 2020 131% of the Group's interest rate risk on its drawn debt was fixed or hedged, or 90% excluding the hedging instruments expected to expire in December 2021. Kevin Nowlan, Chief Executive Officer of Hibernia, said: 

"We have made further progress in improving the returns from our portfolio and our rent collection statistics remain strong. Our asset management activity has added €0.9m per annum to our contracted rent from our commercial properties, we have acquired two small properties to enhance the future value of our existing assets and we have completed our accretive €25m share buyback programme. Our commitment to improving our ESG performance can be seen from our achievement of a four-star GRESB rating for the first time and a B- rating in our first CDP questionnaire response.

"While there was a modest pick-up in activity in the Dublin office market in the final quarter of 2020, letting and investment volumes are likely to remain subdued until workers are able to return to their offices in meaningful numbers.

"Hibernia continues to be well-positioned with a strong tenant base, 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

Andrew Smith: +353 83 076 5717, asmith@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.

[1] Approximately 90% of Group contracted rent per annum

[2] Approximately 10% of Group contracted rent per annum

[3] Excluding Marine House and Clanwilliam Court, where the leases are being run down to facilitate their redevelopment in the near term

[4] Estimated rental value

[5] Including costs

[6] Formerly the Carbon Disclosure Project