Hibernia REIT outperforms the Irish property sector

Hibernia REIT outperforms the Irish property sector – Hibernia REIT (HBRN ID) has reported positive results for the 12 months to 31 march 2018, despite the increase in stamp duty, with developments and residential assets being particularly strong performers.

The company’s portfolio delivered a total property return (excluding acquisition costs) of 11.6%, outperforming its benchmark, the IPD Ireland Index, which returned 6.8%.

The company’s EPRA NAV per share grew by 8.7% to 159.1 cent. The board are proposing a 1.9% per share final dividend taking our total for the year to 3.0 cents, an increase of 36.4% over the prior year.

Outlook from Kevin Nowlan, Chief Executive Officer

“The supply of new offices in Dublin remains relatively constrained, particularly in the city centre market in which we specialise, and economic momentum in Ireland continues to be strong, as does demand from domestic and international occupiers for office space in Dublin.  These same dynamics are also in evidence in the residential rental market. We are positive on our prospects: we have a talented team, a portfolio rich in opportunity and flexible, low-cost funding available to support our plans.”

Financial performance

  • Portfolio value of €1,308.7m, up 6.6% in the year (developments up 18.3%1)
  • 12-month total property return of 11.6% vs IPD Ireland Index of 6.8%
  • EPRA NAV per share of 159.1 cent, up 8.7% in the year and 2.4% in H2 (7.4% excl. stamp duty change)
  • Net rental income of €45.7m, up 15.1% on prior year (March 2017: €39.7m)
  • Profit before tax of €107.1m including revaluation surplus (March 2017: €119.0m)
  • EPRA EPS of 2.8c, up 27.3% on prior year (March 2017: 2.2c)

Impact of recycling of capital

  • Sale of three smaller assets for €35.8m, prices in aggregate 20.6% ahead of Sept 2017 carrying values
  • Acquisitions totalling €39.1m made, primarily
    • 77 SJRQ: 34,000 sq. ft. office purchased and simultaneously let, driving immediate valuation gain
    • Gateway: 31.3 acres adjacent to existing site purchased

Development programme and pipeline projects

  • Two schemes, 1WML and 2DC, completed in the year, delivering 197,000 sq. ft. of Grade A offices and profit on cost of >65% (at completion)
  • Three committed schemes totalling 222,000 sq. ft. Grade A offices now in progress
    • 1SJRQ and 2WML (172,000 sq. ft.) both delivering by end of 2018, completing the Windmill Quarter
    • Cumberland Place Phase II (50,000 sq. ft., H1 2020 completion) committed in May 2018
  • · Progress made with longer-term pipeline of four schemes
    • Preparing and optimising the three pipeline office schemes totalling 505,000 sq. ft. post completion
    • Gateway Land holding now 45.4 acres, planning application made for new access road

Income and WAULT of portfolio increasing due to new lettings and rent reviews

  • Annual contracted rent roll4 now €56.0m and “in-place” office portfolio WAULT to earlier of break / expiry now 7.3 years, up 15.9% and 9.0% in the year, respectively, driven by:
    • €5.7m of new lettings in completed schemes with avg. term to earlier of break / expiry of 11.4 years
    • €1.3m of rent reviews settled with an average uplift of 138%, in line with ERVs
  • Acquired “in-place”[5] CBD offices have avg. rents of €39psf, reversionary potential of 20.6% and an avg. period to earlier of rent review or expiry of 2.6 years

Financial position

  • Net debt at 31 March 2018 of €202.7m, LTV of 15.5% (March 2017: €155.3m, LTV 13.3%)
  • Cash and undrawn facilities of €197.3m: €120.3m net of committed development spend

Dividend

  • Final dividend of 1.9 cent per share bringing total for year to 3.0 cent up 36.4% (2017: 2.2 cent)
  • Expect further growth from developments and capturing reversion via lease events / reviews

HBRN ID : Hibernia REIT outperforms the Irish property sector

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