Hibernia in negotiations to set up debt facilities

Hibernia REIT — one of the new breed of property investment funds to have floated in the past year — is in negotiations with a number of potential lenders in the hope of establishing debt facilities to be used to fund its purchasing activity.

In its latest trading update, issued yesterday, Hibernia said that it was considering “all available funding options — including debt, equity and joint ventures, as would be expected in the ordinary course of business”.

However, speaking to journalists following the company’s inaugural public AGM yesterday, its chief executive, Kevin Nowlan, was more specific and said that putting facilities in place for debt financing would be “the natural next step” for the business.

“We still see significant opportunity in the market and debt would be our first initial step [towards funding activity],” he said, also noting that a secondary share offering was not an option being looked at by management at present.

He did note, however, that as real estate investment trusts become more prevalent in the Irish market, more joint-venture activity and co-operation between funds is likely to be seen.

Asked about the identity of its prospective lenders — largely on the back of the recent news that bank of Ireland has restarted property development lending activity — Mr Nowlan did not name any banks but said that negotiations are ongoing and that the company hopes to reach agreement “in the not too distant future”.

“We are talking to a number of parties and domestic banks are in that grouping,” he added.

Hibernia — the second Irish-based REIT to float, following the earlier IPO of Green REIT — raised around €370m from floating on the Irish Stock Exchange late last year.

A busy property acquisition and investment programme since has seen it spend around €336m, or nearly 90% of its net initial funds raised.

A further €63m has already been committed to various projects.

Goodbody Stockbrokers welcomed the plan to add debt to Hibernia’s equity base, saying it should add an additional €175m for further purchases.

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