Hibernia REIT eyes further acquisitions

Hibernia REIT [real estate investment trust] expects the unprecedented level of sales in the Irish commercial property market to continue to drive strong performance for the investment trust in 2015.

Hibernia yesterday posted interim results for the six months to the end of September in which it invested €319m and committed a further €78m in 12 Dublin-based property transactions; bringing the total invested and committed to €476m.

Total property income was €5.6m, which combined with revaluation gains drove total income of €34.5m with operating expenses leaving operating profit and pre-tax profit of €31.9m.

Hibernia REIT has an investment management agreement with W K Nowlan REIT Management Ltd for the provision of investment management services.

WK Nowlan REIT Management chief executive, Kevin Nowlan said: “I am delighted with our progress and in particular with the portfolio we have assembled, which is already delivering attractive returns and is rich in potential.

“The successful completion of our €300m secondary equity offering earlier this month was a strong vote of confidence in our strategy and delivery to date. The capital raised positions us well to take advantage of the significant pipeline of acquisition opportunities we expect in the next 12 to 18 months.

“In fact, what’s going on at the moment in the history of the state is really unprecedented in the context of the volume of sales that are going on... If you look at Nama, they’re saying they’re going to put €4.5bn of Irish property onto the market next year, into a market that usually does about €1bn to €1.5bn in a year and that’s just one seller.

“You still have Ulster Bank in the process of doing Project Aran which we understand has gone up to a debt book of €6bn... It creates further opportunities for entities like ourselves,” added Mr Nowlan.

Hibernia REIT’s portfolio is comprised of 81% of Central Business District offices which are 99% occupied with a current yield on cost of 5.5%. A further 11% of the portfolio is residential while 6% is based in office development sites such as at Windmill Lane and 1-6 Sir John Rogerson’s Quay in the popular Dublin Docklands area.

Mr Nowlan said that while the Dublin market would continue to represent its core focus, if opportunistic acquisitions that offered value were to become available elsewhere, they would be considered by Hibernia.

He added that with 87% of the REIT’s acquisitions completed off-market that this policy would continue as the organisations preferred method of taking on new properties.

Work on completing the fit out of 213 partially completed apartments at Wyckham Point in South Dublin will, Mr Nowlan said, be completed by the end of the year with the first units available to rent in mid-2015.

Mr Nowlan said the additional €300m in equity secured coupled with debt gives the REIT “firepower” of close to €600m which, with the amount of deleveraging expected in the coming months, is likely to see a continued high rate of acquisitions.

The improvement in the economy, particularly in Dublin and driven by US companies, will lead to supply issues with regard to Grade A office accommodation in the capital, Mr Nowlan also predicted.


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