Hibernia REIT PLC Hibernia REIT plc Trading Update (3983U)

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RNS Number : 3983U

Hibernia REIT PLC

29 July 2020

Hibernia REIT plc Trading Update

Hibernia REIT plc ("Hibernia" or the "Group") issues a trading update relating to the period from 1 April 2020 to date, ahead of its Annual General Meeting being held at noon today.

Highlights

-- 98% of commercial rent for quarter ended September 2020 now received or on agreed monthly payment plans; 98% of residential rent for the month of July 2020 now received

   --    2 Cumberland Place development remains on track to complete by the end of 2020 
   --    EUR3.5m invested in two property acquisitions; no disposals made 

-- Smart meters installed at our key managed office buildings to drive further improvements in the environmental performance of our portfolio

Market update

Unsurprisingly COVID-19 and the associated lockdown have had a significant impact on the volume of investment transactions and lettings in the Dublin market. Investment transactions in the first half of 2020 totalled EUR1.1bn (H1 2019: EUR1.8bn), with aggregate activity in the second quarter falling to EUR0.4bn (Q2 2019: EUR1.2bn). Yields for prime offices in central Dublin remain around 4% (source: Knight Frank).

Dublin office take-up in the first half of 2020 was 0.9m sq. ft. (H1 2019: 1.7m sq. ft.). The second quarter was particularly impacted by the restrictions on movement, with letting volumes of 0.1m sq. ft. (Q2 2019: 0.4m sq. ft.). This resulted in the vacancy rate for Grade A office space in Dublin's city centre growing from 5.9% to 6.6% in the quarter ended June 2020 and the overall Dublin office vacancy rate growing from 6.5% to 7.3%. Prime Grade A office headline rents in the city centre remained at EUR62.50 per sq. ft. (source: Knight Frank). Active demand at the end of June stood at 2.6m sq. ft., down 16% from the end of February, as occupiers have reassessed their plans (source: Cushman & Wakefield and Hibernia).

Investment and letting activity are beginning to resume and we expect greater clarity on the trajectory of market yields and rental levels in the coming months as transactions complete.

Rent collection

Commercial rent (c. 90% of Group contracted rent)

The table below summarises the rent collection position at close of business on 28 July 20 20. The proportion collected within 30 days of the gale day for the quarter ending 30 September 2020 is similar to that for the quarter ended 30 June 2020.

 
                                     Quarter ending Sep-20 (Q2        Quarter ended     Quarter ended Mar-20 (Q4 FY20) 
 Commercial rent                               FY21)                 Jun-20 (Q1 FY21) 
 Rent collected 
  Within seven days                              87%                        89%                       93% 
 Within 14 days                                90.5%                       89%                       94% 
 Within 30 days                                90.5%                       90%                       98% 
 Within 60 days                                  -                        93.5%                     99.5% 
                                  -------------------------------  ------------------  ------------------------------- 
 Rent collected at 28 July 2020                90.5%                      95.5%                      100% 
                                  -------------------------------  ------------------  ------------------------------- 
 Rent on payment plans 
  Monthly rent not yet due                       7.5%                        -                         - 
 Rent deferred                                   -                        3.5%*                       - 
                                  -------------------------------  ------------------  ------------------------------- 
 Rent on payment plans at 28 
  July 2020                                     7.5%                      3.5%                        - 
                                  -------------------------------  ------------------  ------------------------------- 
 Rent unpaid 
  Rent due                                        1%                        1%                         - 
 Rent waived                                     1%                         -                         - 
                                  -------------------------------  ------------------  ------------------------------- 
 Rent unpaid at 28 July 2020                     2%                        1%                         - 
                                  -------------------------------  ------------------  ------------------------------- 
 

* Due to be paid in full by July 2021

Residential rent (c. 10% of Group contracted rent)

At close of business on 28 July 2020 98% of contracted rent for the month of July had been collected. At the same point in May and June 98% and 97% of monthly contracted rent had been collected, respectively, and this has now risen to 99% for both months.

Asset management

The vacancy rate in our in-place office portfolio is 9%, up from 7% at 31 March 2020 following the expiry of leases on 21,000 sq. ft. in Marine House in June 2020. The majority of the remaining available space is in the Forum and Central Quay. Four office rent reviews are active over 62,500 sq. ft.: the expected rents exceed current passing rents by c. EUR1m per annum.

The vacancy rate in our residential portfolio is 7%, up from 5% at 31 March 2020.

Acquisitions and disposals

Since 31 March 2020 we have invested EUR3.5m (excluding costs) in two bolt-on acquisitions of assets adjacent to our existing properties. No disposals were made in the period.

Developments and refurbishments

Work on 2 Cumberland Place, our 58,000 sq. ft. office development remains on track for completion by the end of 2020. 41% of the building was pre-let to 3M in April 2020.

Sustainability

We have now installed smart meters at our key managed office buildings to provide real time utility consumption data to help us drive further improvements in the environmental performance of our portfolio.

Balance sheet

At 30 June 2020 Hibernia had net debt of EUR235m and cash and undrawn facilities of EUR160m. Net of committed expenditure and payment of the final dividend of 3.0c per share on 31 July 2020, cash and undrawn facilities totalled EUR125m.

Kevin Nowlan, Chief Executive Officer of Hibernia, said:

"It is reassuring that whilst our business has not escaped the impact of COVID-19, the quarter ending September is showing rent collection rates similar to the previous quarter. Following a sharp slowdown in investment and leasing transactions in the market due to the lockdown, activity has started to resume and the coming months should provide greater clarity on market rental levels and yields. At present we expect a modest decline in our net asset value per share over the six months to 30 September 2020.

"Notwithstanding the uncertain economic outlook Hibernia remains in a strong position: our balance sheet is extremely robust, we have a high-quality tenant base and an accretive development pipeline to deliver long term value for our stakeholders."

ENDS

Contacts:

Hibernia REIT plc [phone]

Kevin Nowlan, Chief Executive Officer

Tom Edwards-Moss, Chief Financial Officer

Murray Consultants

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

Andrew Smith: [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 29, 2020 02:00 ET (06:00 GMT)