Hibernia REIT PLC Trading Statement (2284W)

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RNS Number : 2284W

Hibernia REIT PLC

31 July 2018

Hibernia REIT plc Trading Update

31 July 2018

Hibernia REIT plc ("Hibernia") issues a trading update relating to the period from 1 April 2018 to date, ahead of its Annual General Meeting being held at noon today.

Highlights

   --     Sale of New Century House for EUR65.3m agreed and acquisition of 50 City Quay for EUR2.7m 

-- 1 Sir John Rogerson's Quay ("1SJRQ") and 2 Windmill Lane ("2WML") developments both on track for 2018 completions, Cumberland Place Phase II expected to complete in H1 2020

   --     One rent review agreed, ahead of ERV, leading to a EUR0.4m increase in annual rent 

-- Nine office rent reviews now active representing passing rent of EUR2.5m per annum, with ERV of EUR4.3m per annum

Occupational market update

Dublin office letting activity in the quarter ended June 2018 maintained the strong momentum of recent quarters with 0.9m sq. ft. taken up. Total lettings for the first half of 2018 exceeded 1.6m sq. ft.: almost half of this came from transactions of 45,000 sq. ft. or greater. Levels of active demand also remain high. Office vacancy at the end of June 2018 was 4% for Grade A space in central Dublin and 6% overall. Prime Grade A headline rents in the city centre remain stable at in excess of EUR60 per sq. ft. (source: Knight Frank).

Acquisitions and disposals

In July 2018 Hibernia exchanged contracts for the sale of New Century House for EUR65.3m. The price, which was modestly ahead of the March 2018 valuation, represents an ungeared IRR in excess of 12% on Hibernia's investment. The sale is expected to complete in September 2018 and continues our recycling of capital into projects with higher expected forward returns.

In July 2018 Hibernia acquired 50 City Quay, an office building of 4,500 sq. ft. with river frontage in Dublin's South Docks, for EUR2.7m. The property, which is vacant, is adjacent to 1SJRQ and expands Hibernia's Windmill Quarter to six buildings with c. 400,000 sq. ft. of office accommodation, when complete, as well as retail and leisure facilities.

Developments and refurbishments

The completion of 1SJRQ is now expected to occur in Q4 2018 and refurbishment and extension of 2WML remains on track to complete in Q4 2018: inspections and discussions with potential occupiers continue. We expect work to commence on site at Cumberland Place Phase II in September 2018 with completion scheduled for the first half of 2020.

Asset management

The vacancy rate in our in-place office portfolio is c. 2%. Since 31 March 2018 one rent review has been settled ahead of ERV, generating an uplift in rent of EUR0.4m per annum (+135%). A further nine rent reviews are due on 86,000 sq. ft. of office space and EUR2.5m of annual rental income: the ERV for the space is EUR4.3m.

Balance sheet

At 30 June 2018 Hibernia had net debt of EUR205m and cash and undrawn facilities of EUR195m. Net of committed development spend, the acquisitions and disposals described in this trading update and payment of the final dividend, cash and undrawn facilities totalled over EUR170m.

Kevin Nowlan, Chief Executive Officer of Hibernia, said:

"The strong demand from occupiers for Dublin office space has continued, with over 1.6m sq. ft. of take-up in the first half of 2018, as has the trend towards larger-sized lettings. Our three committed developments are progressing towards completion and are well-timed to capitalise on the high levels of active demand in the market and to drive increases in our rental income.

"We are also moving into a busy period of rent reviews which will enable us to start capturing the reversionary potential within our acquired in-place office portfolio, which is significantly under-rented. Since 31 March 2018 we have concluded one small rent review, ahead of its estimated rental value, and we now have nine office rent reviews active, representing passing rent of EUR2.5m per annum.

"With the agreed sale of New Century House and the acquisition of 50 City Quay, we are continuing to recycle our capital into opportunities where we expect greater future returns. Hibernia is well positioned with an extensive longer-term development pipeline, a robust balance sheet and an experienced management team."

ENDS

Contacts:

Hibernia REIT plc [phone]

Kevin Nowlan, Chief Executive Officer

Tom Edwards-Moss, Chief Financial Officer

Murray Consultants

Doug Keatinge: [phone], [e-mail]

Jill Farrelly: [phone], [e-mail]

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.

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July 31, 2018 02:00 ET (06:00 GMT)