Interim Results - Hibernia REIT plc/media/Files/H/Hibernia... · 2014-11-17 · (2) Once rent abatement period ends in September 2015 (3) Hibernia REIT has the right to take full

Interim Results

November 2014

DISCLAIMER

2

This presentation (hereinafter "this document") has been prepared by Hibernia REIT plc (the "Company") and WK Nowlan REIT Management Limited ("WNRML"), the Company’s investment manager, for information purposes only.

This document has been prepared in good faith but the information contained in it has not been independently verified and does not purport to be comprehensive. The Company is not undertaking any obligation to provide any additional information or to update this document or to correct any inaccuracies that become apparent. This document is neither a prospectus nor an offer nor an invitation to apply for securities. The information contained in this document is subject to material updating, completion, revision, amendment and verification. This document does not constitute or form a part of any offer for sale or solicitation of any offer to buy or subscribe for any securities. Any prospective investor must make its own investigation and assessments and consult with its own adviser concerning any evaluation of the Company and its prospects.

No representation or warranty, express or implied, is given by or on behalf of the Company, its group companies, WNRML or any of their respective shareholders, directors, officers, employees, advisers, agents or any other persons as to the accuracy, completeness, fairness or sufficiency of the information, projections, forecasts or opinions contained in this presentation. In particular, the market data in this document has been sourced from third parties. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in any of the information or opinions in this document.

Certain information contained herein constitutes "forward-looking statements", which can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or actual performance of the Company may differ materially from those reflected or contemplated in such forward looking statements. No representation or warranty is made as to the achievement or reasonableness of, and no reliance should be placed on, such forward-looking statements. There is no guarantee that the Company will generate a particular rate of return.

The Company has not been, and will not be, registered under the US Investment Company Act of 1940, as amended, and investors are not entitled to the benefit of that Act.

3

Operating and financial highlights

Market update

Portfolio summary

Conclusion and outlook

Agenda

Overview

OPERATING AND FINANCIAL HIGHLIGHTS

(1) Since IPO by purchase price

4

• Highly active but disciplined period of investment- €397m invested and committed in Dublin property in 12 transactions (since IPO €476m)- Competition avoided where possible: 87% of acquisitions(1) off-market and 44% through secured loans- Have walked away where prices exceed our valuations

• High quality Dublin property portfolio assembled- 81% Dublin CBD offices, remainder across Dublin residential, office development sites and industrial- Dublin CBD office portfolio yield on cost 5.5% (5.8% on contracted rent) off average rents of €34psf- Substantial development opportunities, majority with existing planning

• Strong financial performance- NAV of 104.7 cent, up 8.6% since March 14- Driven by 9.6% valuation uplift on contract price in weighted avg. hold period of 3.9 months

• Funding in place to take advantage of investment opportunities- Secondary equity issue successfully completed in early November: current cash and committed facilities

of €330m- €100m revolving credit facility entered in August 2014- Further incremental firepower of c. €360m if leveraging existing equity base to 40% LTV

• Maiden dividend declared- €2.0m to be paid over enlarged share capital: 0.3 cent per share

Maiden dividend of 0.3 cent per share declared

Deployed €476m across office, residential, andindustrial property assets in 13 acquisitions

€408m investment properties

€69m in secured loans

81% by value of property portfolio in Dublin CBD offices

NIY on cost: 5.5%(1)

NIY on cost on contracted rent: 5.8%(2)

6% by value in Dublin CBD office development sites

All office acquisitions within Dublin CBD; ex-CBDacquisitions both with good transport links

Option for vendor to enter into JV structure on WindmillLane development

Net proceeds fully invested within 9 months of IPO

€100m RCF in place, LTV well below 40% if fully drawn €25m drawn as at 30 Sept

Portfolio valuation as at 30 September 2014 shows9.6% uplift on purchase price on weighted averageperiod from exchange of 3.9 months

Delivery since IPO

5


Build diversified portfolio of property types

Hibernia has delivered on its strategy since IPO

Strategy proposed at IPO Achieved

Majority in prime office buildings

Full scale development of up to 15% of NAV

Primarily Dublin CBD or Greater Dublin area

Ability to enter JVs

Deploy a significant portion of the net proceedswithin 18 to 24 months

Gearing not to exceed 40% of portfolio

TSR of 10-15% p.a. (pre-taxation)

(1) Post completion of acquisition of The Forum(2) Assumes The Forum is completed and option for Hardwicke House and Montague House is exercised

Purchased via

Loan

€208m44%

Direct Property

Acquisition

€268m56%

Name

Contract signing month

Initial investment Type

Net initial yield on cost

Acquisitiontype

Acquisition structure

Dorville Portfolio (key assets: Wyckham Point, South Dock House and Cannon Place)

Feb €67m Dublin Residential, Dublin CBD Office(Loans + receivables non-core assets)(1)

n/a Off-market Loan (6)

New Century House Mar €47m Dublin CBD Office c.6%(2) Off-market Property

Gateway Site Apr €10.1m Industrial c.4% On-market Property

Montague House and Hardwicke House

May €18.3m(3) Dublin CBD Office c.8% Off-market Loan

Chancery Building and Chancery Apartments

May €16m Dublin CBD Office c.7% Off-market Loan

Hanover Building May €20.2m Dublin CBD Office c.7% Off-market Loan(7)

Windmill Lane May €7.5m Dublin CBD office development/refurb

n/a Off-market Property

Observatory Jun €51.5m Dublin CBD Office c.4%(4) On-market Property

Guild House and Commerzbank House

Jul €90.8m Dublin CBD Office c.7% Off-market Property

The Forum Aug €37.8m(5) Dublin CBD Office c.7% Off-market Property

1-6 SJRQ Aug €17.8m Dublin CBD office development/refurb

n/a Off-market Property

Cumberland House(8) Aug €38m Loans + receivables 6% Off-market Loan

BH Loan Portfolio Sep €2m Dublin Residential n/a Off-market Loan

Total invested €424m

Total committed to complete acquisitions

€42m

Acquisition costs €10m

Total deployed incl.acquisition costs

€476m

Summary of acquisitions to date

6


Notes(1) Dorville acquisition includes €29m of assets (by cost) of non-core assets (i.e. held for sale)(2) Once rent abatement period ends in September 2015(3) Hibernia REIT has the right to take full ownership for an incremental €41.75m(4) Once rent free periods end in 2015 and 2016(5) Completed on 7 November 2014

Off-market

€413m

87%

On-market

€63m

13%

Summary by cost

Dublin CBD

office

€336m71%

Industrial

€10m

2%

Dublin Res

€36m

8%

Dublin CBD

office

development / Refurb

€26m

6%

Loans +

receivables

€69m14%

Since commencing operations in January 2014, €476m of capital deployed

(6) Transfer of Wyckham Point to direct property ownership now occurred(7) Transfer to direct property ownership now occurred(8) Hibernia has provided 6 month secured loan to owners of Cumberland House to facilitate a potential acquisition

On vs. off market

Purchase method

Asset type

Financial highlights as at 30 September 2014

7


NAV increase due to valuation uplift: maiden dividend declared

Note: Unaudited financials

• 8.6% uplift in NAV driven by valuation increase on investment properties

• Current liabilities principally comprises RCF drawings (€25m) and balance owed on Forum acquisition (€35m)

• Non-current liabilities in relation to deferred acquisition of Hardwicke & Montague House

• Increased revenue due to rental and interest income from properties and secured loans

• Other gains & losses relates to gains on subsequent recognition of Dorville core assets as investment property at fair value

• Expenses growing as Investment Manager fee increases with invested NAV

Balance sheet30-Sep(€,000)

31-Mar(€,000)

Investment Properties 438,060 0

Loans 67,365 68,563

Current Assets 7,318 303,337

Current Liabilities (67,149) (933)

Non-Current Liabilities (42,681) 0

Net Assets 402,913 370,966

EPRA NAV per share (cent) 104.7 96.4

Income statement 30-Sep 31-Mar

Revenue 5,758 158

Revaluation of inv. properties 18,810 0

Other gains and losses 10,059 0

Operating expenses (2,578) (1,159)

Other (102) 155

Net income 31,947 (846)

Basic and diluted EPS (cent) 8.298 (0.221)

Substantial acquisition capacity following equity issue

8


Total acquisition capacity of over €550m

Current Financial Capacity €m

Net cash as at 30 Sept 3

Net proceeds of placing & open offer 287

RCF repayment (25)

Forum acquisition completion (35)

Current Cash 230

Existing debt facility 100

Current cash & committed facilities 330

Future Acquisition Capacity €m

Incremental new debt capacity @ 40% LTV 360

Future Non-Core Sales 29

Estimated capex: Wyckham, SJR & Windmill Lane (110)

Hardwicke and Montague deferred consideration (43)

Further incremental acquisition capacity 236

9


Market update

Portfolio and acquisitions


-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

-4%

-3%

-2%

-1%

0%

1%

2%

Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014

Annual (RHS) Quarterly (LHS)

Irish economic backdrop supportive of continued recovery in property market

10

MARKET UPDATE

Irish GDP growth continues to recover post financial crisis Employment growth has picked up

PMIs are well into positive territory Recent acceleration in Irish economic recovery

Source: CSO, Goodbody

Source: CSO

Source: Bloomberg, Markit

Data released

since IPO

Data released

since IPO

1.5% GDP growth recorded in Q2 2014

7.7% growth vs. prior year

Government GDP growth forecasts to be revised upwards as aresult

Minister of Finance now expecting 4.7% GDP growth for 2014

Outperformance driven by both domestic demand and growth inexports

Revised budget deficit forecast of 3.7% of GDP for 2014

vs. estimate of 4.8% in April 2014

Source: CSO

40

45

50

55

60

65

May 1

1

Jul 11

Sep 1

1

Nov 1

1

Jan 1

2

Mar

12

May 1

2

Jul 12

Sep 1

2

Nov 1

2

Jan 1

3

Mar

13

May 1

3

Jul 13

Sep 1

3

Nov 1

3

Jan 1

4

Mar

14

May 1

4

Jul 14

Sep 1

4

Composite Manufacturing Services

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F

%YoY

420

470

520

570

620

670

720

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Capital valu

e index

0

200

400

600

800

1,000

1,200

1,400

1,600

1977

1981

1984

1986

1988

1990

1992

1994

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Capital valu

e index

Commercial property market recovering strongly, particularly office sector

11

Commercial property is continuing its recovery Capital values are currently at c.1999 levels

Quarterly change in capital values by sector Quarterly change in rents by sector

Source: Jones Lang LaSalle Source: Jones Lang LaSalle

Source: IPD Source: IPD

Data released

since IPO

Data released

since IPO

MARKET UPDATE

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Quart

erly c

hange

Retail Office Industrial

Data released

since IPO

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Quart

erly c

hange

Retail Office Industrial

CBRE forecasting prime rents at c.€60psf by 2020(1)

Rental market: Dublin office dynamics

12

Number of Grade A vacant buildings in Dublin IFSC, 2 and 4

12

1

9

12

12

1

2

3

0

2

4

6

8

10

12

14

0 - 9,999sq.ft.

10,000 -19,999sq.ft.

20,000 -29,999sq.ft.

30,000 -39,999sq.ft.

40,000 -49,999sq.ft.

50,000 -59,999sq.ft.

60,000 -69,999sq.ft.

70,000 -79,999sq.ft.

80,000 -89,999sq.ft.

90,000 -99,999sq.ft.

100,000-149,999

sq.ft

150,000sq.ft.+

Only 1 building of >50,000 sq. ft. currently vacant, down from 5 at end of

Q2 2013

IFSC

Dublin 2

Dublin 4

Source: Jones Lang LaSalle Dublin Office Market Report Q3 2014, (1) CBRE Outlook 2014

MARKET UPDATE

Dublin office take-up expected to be c.2m sq.ft. in 2014

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Q3 2

014

Million s

q.f

t.

Take Up 20 Year Average

Source: Jones Lang LaSalle

Vacancies reducing and limited new supply

Source: Jones Lang LaSalleSource: Jones Lang LaSalle

Dublin geographic take-up

52% 56% 59% 62%

48% 44% 41% 38%

0%

20%

40%

60%

80%

100%

2011 2012 2013 to Q3 2014

City Centre Suburbs


0

1

2

3

4

5

0

10

20

30

40

Q4 2

001

Q4 2

002

Q4 2

003

Q4 2

004

Q4 2

005

Q4 2

006

Q4 2

007

Q4 2

008

Q4 2

009

Q4 2

010

Q4 2

011

Q4 2

012

Q4 2

013

Q3 2

014

Million s

q.f

t.

Occupied Stock Vacant Stock Under Construction

Investment market: record transaction levels expected

13

MARKET UPDATE


Year to date direct property sales of €2.9bn have already achieved 150% of total volume for 2013, when €1.9bn of directproperty was transacted

Total direct property and loan sales of €5bn expected for 2014

Large supply pipeline in Q4 2014, with NAMA, Bank of Ireland and Ulster Bank expected to be the most significant sellers

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

€m

illions

Total Investment Volumes Loan Sales Forecast Direct & Loan

Note: Excludes IBRC loan sales of €9.3bn nominal value

Irish property investment market growing strongly

€1.4bn = series average

Opportunities remain within the NAMA portfolio

NAMA loan portfolio: split by geography (Dec-13) NAMA loan portfolio in Dublin: split by type (Dec-13)

DCB = Dublin Commuter BeltSource: NAMA Note: Split of AuM in NAMA portfolio as of 31-Dec-2013(1) NAMA carrying value of loans (total portfolio) as at 31-Dec-13(2) NAMA carrying value of loans in Dublin as at 31-Dec-13

Dublin38%

DCB5%Cork

6%

Northern Ireland

4%

Galway2%

Limerick1%

Rest of Ireland4%

London18%

Rest of Britain12%

Rest of World10%

Office24%

Retail18%

Industrial2%

Residential20%

Development15%

Land13%

Hotel & Leisure

5%

Other3%

43% of NAMA’s total portfolio is Dublin based

Hibernia target sectors

€19.6bn(1)€7.5bn(2)

14

MARKET UPDATE

• In October 2014 NAMA announced that it would bring five Irish property portfolios, with a combined value of approximately €600m to the market in Q4 2014

• The portfolios will comprise offices, shopping centres, hotels and apartments• NAMA’s publicly stated intention is to bring property portfolio sales with a minimum value of €250m to the market each

quarter

Other institutions: disposals anticipated

15

Banks Continue to make selective loan and asset sales

To materially reduce non-core assets; disposal of £9bn in Irish investment and development loanscommenced in February 2014 with €850m sale process for portfolio of commercial loans. ProjectAaron on market with par value of c.€6bn.

Irish loan book considered non-core; residual value of €3.5bn as of Q2 2014

Other Private equity funds, active over last 36 months in Ireland, have become increasingly active in other EU markets andsome are exploring opportunities to exit Irish assets particularly where project management expertise is required

Selected funds that have been active in Ireland in recent months include:

JV opportunities – NAMA has confirmed it will engage in JV opportunities with suitable partners, as have some PEfunds, and these opportunities will most likely emerge where project management expertise is required

Total value of commercial property transactions has increased significantly since IPO and is expected to continue;JLL forecasting direct property and commercial loan transactions totalling €5bn in 2014(1)

(1) Source: Jones Lang LaSalle

MARKET UPDATE

16


Market update

Portfolio summary


Key: Office ; Residential ; Industrial ; Development

Location of Hibernia portfolio

Dublin overview Central Dublin portfolio

M1

M50

M50

N3/M3

N2/M2

M50

Dublin

N81

Howth

Clontarf

DublinAirport

North BullIsland

Portmarnock

Blanchardstown

Clondalkin

Tallaght

Blackrock

Ballsbridge

Rathfarnham

Phibsborough

DrumcondraCastleknock

Sutton

NorthernCross

Beaumont

Ballymun

The Ward

NorthwestBusiness Park

Glenageary

Dundrum

Palmerstown

Kimmage

N11

Source: Google Maps, Visit Dublin, Jones Lang LaSalle

Ballymount

N4/M4

N7/M7

17

1 Wyckham Place

2 New Century House

3 Gateway Site

4 Montague House

5 Hardwicke House

6 Chancery Building and Chancery Apartments

7 Hanover Building

8 Windmill Lane

9 Observatory

10 Guild House

11 Commerzbank House

12 The Forum

13 1-6 SJRQ

14 Cumberland House

3

1

Office properties all within CBD; ex-CBD acquisitions both with good transport links

Croke ParkFairview Park

Alexandra BasinRiver Liffey

Herbert Park

Kings Inns

St. StephensGreen

98 7

6

212

13

14

2

876

913

12

14

4&5

10&11

45

1110

PORTFOLIO SUMMARY

10.2%

€34.2m

€60

Yield on cost

€408m

Dublin CBD office portfolio

Portfolio statistics

18

EPRA portfolio net initial yield as at 30 September 2014 of 4.8%

excl. acq. costs / with acq. costs

Dublin Residential

Dublin CBD Office Development /

Refurb

8.2% / 5.7%

28%(3) / 25%(3)

5.7% / 2.9%

Whole investment property portfolio

As at 30 September

9.6%(3) / 7.1%(3)

Latest value

€336m(1) €355m(1)

€36m €46m

€26m €26.7m

€438m

€45 per sq.ft.

5.5%

€16.0m

0.8%(3)

€0.3m

0%

€0m

7.6%

€25.6m

0.8%(3)

€0.3m

0%

€0m

4.6%

€16.8m

5.0%

€20.2m

8.5%

€28.5m

% uplift since acquisition Passing(2) / Contracted(1)

Implied yield at illustrativecontracted office rents(4)

€50Rent and yield on cost

% of total investment

property value

100%

81%

6%

11%

Dublin Industrial / Logistics

Secured loans

Total assets

today

(1) Assumes full ownership of Hardwicke and Montague and The Forum is a completed acquisition. The Forum completed on 7th November 2014 (2) Pre full ownership of Hardwicke and Montague and post completion of The Forum (3) Includes €1.5m capex spent on Block 3, Wyckham Point since acquisition(4) Current Hibernia Dublin CBD office portfolio average contracted rent of €34 per sq.ft.

0% / -2.9%€10.4m €10.1m4%

€0.5m

4%

€0.5m2%

0% / 0%€68m

- -

€476m €505m

Purchase price

(including cost)

5.8%

€19.5m

€67m

- -

PORTFOLIO SUMMARY

15%

15%

12%

11% 11%

6%

Rest of

tenants30%

Office portfolio has broad tenant base

Office portfolio statistics Contracted rent by sector

Source: Company informationNote: There are three different BNY entities and these are accounted for as one tenant group in the analysis

€19.5m

19

TMT 12%

Financial

Services 79%

Other 9%

€19.5m

Top 6(1) tenants account for c.70% of total contracted office rent

Total contracted office rent

Total contracted office rent

Contracted rent by tenant

Office portfolio has occupancy of over 99%

Average contracted rent per sq. ft.: €34

Weighted average period to rent review: 2 years

WAULT to earlier of expiry or break: 4.4 years

WAULT to expiry: 9.2 years

Weighted average capital cost per sqft at acquisition: €590

PORTFOLIO SUMMARY

Significant development pipeline with planning in place

20

PORTFOLIO SUMMARY

Windmill Lane & Sir John Rogerson’s Quay Sites

• Estimated capex to complete: €25m

• 213 partially completed apartments

• Fit-out work commenced in August 2014

• On track to deliver first completed apartments in Q2 2015

• Project on budget and on schedule to complete by end of 2015

• Estimated combined development costs of c. €85m

• Both site with existing planning permission:

o Windmill Lane: 124,838 sq. ft. (net) office space, 9,547 sq. ft. retail & 15 residential units

o SJR: 102,021 sq. ft. (net) office space, 5,360 sq. ft. retail & 3 residential units

• Site acquired for average of c. €100 per sq. ft. of net lettable space

Block 3, Wyckham Point, Dundrum

21


Market update

Portfolio and acquisitions



CONCLUSION AND OUTLOOK

Hibernia has delivered on its strategy since IPO with disciplined

approach to investment

Considerable opportunity both in existing portfolio and through

further acquisitions

Hibernia well positioned to take advantage of the opportunity

22

23

24

Appendix

Investment properties cost vs. value analysis

25

30 September 2014 valuations

APPENDIX

Purchase Completion

Date

Purchase Price

€m

Purchase Price (include. Costs &

Capex)

30/09/2014 Valuation

€m

% of Investment Properties

% increase on Purchase Price

(exclude. Costs & Capex)

% increase on Purchase Price (include. Costs

&capex

Dublin CBD Officers

New Century House Apr 14 47 48 52 12% 10% 7%

The Hanover Building Jun 14 20 21 20 5% 1% -3%

Hardwicke & Montague House May 14 60 61 70 16% 17% 14%

The Chancery Building Jun 14 16 17 16 4% -2% -5%

South Dock House Mar 14 5 5 7 1% 38% 35%

The Observatory Jul 14 52 53 57 13% 10% 8%

Guild and Commerzbank House Jul 14 91 93 96 22% 5% 3%

The Forum Nov 14 38 39 38 9% 2% -1%

Total Dublin CBD Offices 328 336 355 81% 8% 6%

Dublin Residential

Block3, Wyckham Point Mar 14 27 30 40 9% 37% 34%

Cannon Place Mar 14 7 8 7 2% -8% -10%

Total Dublin Residential 35 37 46 11% 28% 25%

Dublin CDB Office Development/Refurb

Windmill Lane Jun 14 8 8 9 2% 16% 13%

1 – 6 SJR Sep 14 18 18 18 4% 1% -1%

Total Dublin CBD Office Development/Refurb

25 26 27 6% 6% 3%

Industrial

Gateway May 14 10 10 10 2% 0% -3%

Total Investment Properties 398 409 438 100% 9.6% 7.1%

APPENDIX

Wyckham Point – Dundrum, Dublin 16

Off-mkt

Loan

Dev. opportunity

Acquisition type

Property type

Acquired as part of €67m Dorville loan portfolio

Apportioned cost of c. €27m

Comprises:

– Wyckham Point – 213 partially completed apartments

– Mix of one, two and three bed apartments

– Excellent amenities incl. 3 acre park with lake, gym, creche

Prime south Dublin residential location

– Good transport links

– Close to Dundrum Shopping Centre

Estimated cost to complete: less than €25m

Building contractor on site

Infill

Good transport links

Residential

Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

Stage 1 - Pre Construction

Stage 2 - Construction

Stage 3 - Turn-key fit-out

Wyckham Point planned timeline to complete

Detailed portfolio profiles

Summary of Dorville portfolio loan acquisition

Off–market acquisition of €67m Dorville loan portfolio from UlsterBank

Purchase price of €67m vs. par value of €151m

Gaining access to a portfolio of 16 assets, principally residential

Hibernia to retain three “core” assets and undertake phaseddisposal of the other assets

Core assets Ascribed cost

Wyckham Point Residential €27m

Cannon Place Residential €6m

South Dock House Office €5m

€38m

Non core assets Ascribed cost

8 residential assets

€20m

2 office assets €2m

3 developmentassets

€7m

€29m

26

27

APPENDIX


Cannon Place – Herbert Road, Dublin 4

Acquired as part of €67m Dorville loan portfolio and €2.4mBH loan portfolio

Apportioned cost of €6m (Dorville) and €1.7m (BH)

Comprises an entire 16 unit apartment block of two and three-bedapartments. 22 units in entire scheme

Well-located modern estate

– Walking distance from Sandymount and Ballsbridge villages

– Close to Lansdowne DART station and the Aviva Stadium

Off-mkt

Loan

Acquisition type

Property type


Residential

South Dock House – 1st Floor Offices, Hanover Quay, Dublin 2

Off-mkt

Loan

Acquisition type

Property type

Acquired as part of €67m Dorville loan portfolio

Apportioned cost of c.€5m, equating to €530psf capital value

Asset comprises

– One floor of 8,955 sq ft in three office suites with parking for 10 cars

– Let to 3 tenants / sub-tenants (Open Hydro Ireland, Collins Stewart, Guggenheim Partners)

– Passing rent of €308k, average of €34psf

– WAULT: 2 years to break, 5 years to expiry

Grade A

CBD

Income producing

Office

APPENDIX

New Century House – Mayor Street, IFSC Dublin 1

Off-mkt

Property

Acquisition type

Acquisition price €47m: equating to €587psf capital value

Asset comprises

– 79,750 sq ft office, 6,202 sq ft storage offices over six storeyswith parking for 87 cars

– Let to Bank of Ireland on FRI lease until 2024, with upward-only rent review in 2019

– Contracted rent €2.85m, or €32psf following expiry of rental abatement in October 2015

– Passing rent €1.85m until expiry of rental abatement in October 2015

– NIY on cost (on contracted rent): c.6%

Significant refurbishment work is about to be implemented bythe tenant

Property type

Grade A

CBD

Income producing

Value-add space

Office


Off-mkt

Loan

Acquisition type

Property type

Grade A

CBD

Income producing

Office

Acquisition price: €60m, equating to €678psf capital value

Acquisition from Hardwicke Group in partially deferred transactionstructure

– Initial acquisition of €18.25m of loans (giving operational control) with NIY on cost of 7.7%

– Right to take full ownership of the buildings any time up to mid-2016 for incremental €41.75m

Assets comprise

– 88,493 sq ft of prime Grade A office space in two 5 storeybuildings on contiguous back-to-back sites with 56 basement car parking spaces

– Both multi-let at avg passing rent of €30psf (Hardwicke €34psf, Montague €27psf)

– WAULT of 7 years to break 10 years to expiry

– 100% of rent to be reviewed during or prior to 2018

– 28% with break clauses in 2016

Montague House & Hardwicke House –Hatch Street Upper & Adelaide Road, Dublin 2

28

29

APPENDIX

Gateway Site – Newlands Cross, Naas Road, Dublin 12

On-mkt

Property

Dev. opportunity

Acquisition type

Property type

Acquisition price: €10.1m

Comprises

– 14.1 acres (5.71 ha) with three large industrial/logistics facilities of 178,330 sq. ft.

– Buildings currently 60% occupied and producing a passing rental income of €0.5m or c.€5.0psf

– Current NIY on cost c.5%

Strategic location adjacent to intersection of Ireland’s two busiestroads and Dublin’s light rail system

Significant redevelopment potential

Prime location


Industrial


Chancery Building - Chancery Lane, Dublin 8

Off-mkt

Loan

Acquisition type

Property type

Acquisition price: €16m Assets comprise

– a) office building with 33,799 sq. ft. space over 6 stories with 19 parking spaces

– Allocated price of €15m for the offices equates to cap. val. of €445psf

– Fully let with WAULT of 8.7 years to expiry and 1.7 years to break

– Average contracted rent of €30psf– NIY on cost 6.8%

– b) four 2 bed apartments in same building with separate entrance

– Fully let on 1 year contracts– Allocated price of €1m for the apartments equates to a

NIY on cost of 6.1%

Grade A

CBD

Income producing

Office

30

APPENDIX

The Hanover Building – Windmill Lane, Dublin 2

Off-mkt

Loan

Dev. opportunity

Acquisition type

Property type

CBD

Income producing

Value-add space

Office

Acquisition price: €20.2m, equating to €410psf cap. val. inrespect of the offices, €130psf cap. val. in respect of theretail and 7.3% NIY on cost

Asset comprises 5 storey building and 13 underground parkingspaces with:

– a) 44,317 sq ft of office space on upper floors

– Fully let to BNY under leases running to 2026/27 with break clause in 2016

– Average contracted rent on office space of €30psf

– b) 11,614 sq ft of retail space on ground floor, 3,649 sq ft in basement

– Fully let to Eurospar to 2032 with break clause in 2019

– Office and retail income all subject to rent reviews in 2016 and 2017

South Docks area one of most popular office locationsin recent years

Adjoins the 1 acre Windmill Lane Site and behind TheObservatory Building and 1-6 SJR all acquired inseparate transactions


Windmill Lane Site – Windmill Lane, Dublin 2

Off-mkt

Property

Dev. opportunity

Acquisition type

Property type

CBD

Value-add space

Office


One acre development site adjoining Hanover Building in SouthDocks area

Existing planning consent for:

– 124,838 sq ft (net) office space

– 9,547 sq ft retail

– 15 residential units

Price paid for land equates to €50psf on the net developable space

12 month option to the vendor to invest on a side by side, equalcost basis on the redevelopment of the Hanover Building and theWindmill Lane Site

31

APPENDIX

The Observatory Building – Sir John Rogerson’s Quay, Dublin 2

On-mkt

Property

Acquisition type

Property type

Grade A

CBD

Income producing

Office

Acquisition price €51.5m

Asset comprises

– a) 84,726 sq ft office over six storeys with parking for 47 cars

– Allocated price of €49.8m for the offices equates to €590 psft.

– 95% let with WAULT of 10.9 years to term and 3.7 years to break

– Tenants include Riot Games, Publicis, Morgan Stanley & Realex Payments

– Low average contracted rent of €26psf

– Annual contracted rent of €2.2m, with rent frees on €1.2m ending in 2015 and 2016

– b) Eight partially completed 2 bed “live / work” units and two retail units

– Allocated price of €1.7m

NIY on cost (post-rent free periods): c.4.1%


Guild & Commerzbank House – Guild Street, IFSC, Dublin 1

Off-mkt

Property

Acquisition type

Property type

Grade A

CBD

Income producing

Office

Acquisition price €90.75m

Purchase of two adjoining buildings in the IFSC. The buildingscomprise:

– 144,250 sq. ft. of office accommodation over five storeys with parking for 148 cars

– €629 psft.

– 100% let with WAULT of 2.8 years to break and 7 years to expiry

– Tenants include FBD Holding Ltd, BNY Mellon and CommerzManagement Services

– Average contracted rent of €39psf

– Annual passing rent of €6.1m

– NIY on cost: 6.6%

APPENDIX


The Forum Building – Commons Street, IFSC, Dublin 1

Acquisition price: €37.8m(1)

Asset comprises

– a) 47,109 sq. ft. of office accommodation over two floors

– Fully let to Depfa Bank under leases running to 2029 with break clauses in 2019

– Average contracted rent on office space of €40psf

– b) 370 parking spaces (over four floors)

– 50 parking spaces used by Depfa Bank as part of their lease

– 320 parking spaces utilised by Park Rite paying €675,000 per annum on a lease that has formally expired. Discussions ongoing with Park Rite

Acquisition price reflects a NIY on cost of 7.0% and capital value of€550 per sq. ft. for the office space and €32,883 per parking space

Off-mkt

Property

Acquisition type

Grade A

CBD

Income producing

Office

Property type

1 – 6 Sir John Rogerson’s Quay, Dublin 2


0.75 acre development site located in South Docks area

This site is located adjacent to The Observatory Building. Hibernia’sHanover Building and Windmill Lane Site are located immediatelybehind this site


– 102,021 sq. ft. (net) office space

– 5,360 sq. ft. retail

– 3 residential units

– 34 parking spaces

Price paid for land equates to €150psf on the net lettable space

Off-mkt

Property

Dev. opportunity

Acquisition type

Grade A

CBD

Value-add space

Office

Property type

(1) Transaction not yet completed. Purchase due to complete on 7 November 2014

32

33

APPENDIX


Cumberland House, Dublin 2

Off-mkt

Loan

Dev. opportunity

Acquisition type

Property type

CBD

Value-add space

Office

Loan Facility Amount: €38m

On 26 August 2014, facility made available to Morretino Ltdsecured on Cumberland House

Continue to explore option to gain a direct interest in CumberlandHouse

Cumberland House is:

Prominent seven story office building of c. 112,000 sq. ft. (and210 parking spaces) constructed in 1977

On a 1.65 acre site with development potential


o 250,000 sq ft (net) office space on a multi let basis

o 268,000 sq ft (net) office space on a single let basis

Located close to Merrion Square, Government Buildings,Trinity College and one of Dublin’s busiest commuter stations,Pearse Street

Dublin residential market also showing strong growth from depressed levels

34

Residential prices now growing across the country Average residential property prices

Source: CSO Source: ptsb/ESRI, CSO, Goodbody

Data released

since IPO

Data released

since IPO

APPENDIX

Capital values in Dublin continue to recover strongly & rental values up 10%(1) in year to June 2014

(1) Source: Private Residential Tenancy Board

-30%

-20%

-10%

0%

10%

20%

30%

Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14

% Y

oY

Dublin Ex Dublin

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Dublin Ex Dublin

Indicative key Investment Manager Agreement terms

Management fees(1)

– Scaling fee for invested EPRA NAV paid quarterly in three tranches:

– On invested EPRA NAV up to €450m, 0.25% of invested EPRA NAV (quarterly payment)

– On incremental invested EPRA NAV above €450m but below €600m, 0.2% of invested EPRA NAV (quarterly payment)

– On incremental invested EPRA NAV above €600m, 0.15% of invested EPRA NAV (quarterly payment)

– For uninvested proceeds, 0.125% of total balance (paid quarterly)

Performance fees(2)

– Calculated annually on both an absolute and a relative basis. Each basis has a 50% weighting in the overall performance fee (i.e. feescalculated separately on a 100% basis and then halved)

– Absolute basis (50% of total): calculated based on outperformance of the following hurdle rates:

– 15% fee of EPRA NAV total return(3) above 10% hurdle, and

– 20% fee of EPRA NAV total return(3) above 15% hurdle

– Hurdle resets annually based on closing EPRA NAV and is subject to a high watermark

– Relative basis (50% of total): calculated based on outperformance benchmarked against the IPD Ireland index:

– 30% fee of total annual property return (increase in gross asset value plus rental income)(4) above IPD Ireland index hurdle

– Hurdle resets annually based on IPD Ireland returns and is subject to a rolling IPD Ireland-driven high watermark

– All performance fees paid through the issue of shares, subject to a staggered 3-year lock-up release, with 1/3rd released after the first,second and third anniversaries of the financial reporting year-end

– Lock-up release will be temporarily suspended if EPRA NAV falls below the gross IPO proceeds

Management contract

– 5 years (from IPO in Dec-13), following which automatically extended on a rolling 3 year basis unless terminated

– 12 month notice period applicable to Hibernia REIT and Investment Manager (earliest termination is at end of initial 5 year period)

– Key person termination rights to be included

Conflicts

– Hibernia REIT to have first refusal on all property investments offered to W.K. Nowlan & Associates

– Manager employees will not be involved in a similar vehicle without Board approval

– Manager employees will not advise any investor in competition with Hibernia REIT

– All conflicts of interest to be disclosed to Hibernia REIT

(1): Management fee calculated by reference to EPRA NAV at the end of each quarter(2) For both management and performance fees, intra-year acquisitions and disposals of property will be assumed to have taken place on the first day of the

financial year in which the acquisition/disposal occurred(3): EPRA NAV total return = EPRA NAV increase + dividends declared for year, adjusted to exclude effects of any share issues.(4): Calculation excludes proceeds that have not yet been invested (i.e. calculated on value of property assets only until fully invested)

APPENDIX

35

Overview of the Irish REIT regime

36

APPENDIX

Summary of Irish REIT regime

Established Introduced by Finance Act 2013

Legal form Irish incorporated PLC company with an allotted share capital of not less than €38,092

Shareholder requirements No closely held company; 10% threshold for corporate shareholders

Listing requirements Listed on the main market of a stock exchange in an EU Member State

Business restrictions >75% of aggregate income derived from property rental business

>75% of portfolio market value must relate to property rental business

Within 3 years of commencement, the REIT must hold at least 3 separate assets, none of which having a market value >40% of total portfolio

Irish and non-Irish assets

Authorised sectors: commercial properties, industrial properties, residential properties

Leverage restrictions Profit financing ratio of at least 1.25 : 1

Profit financing ratio = property income plus property finance costs divided by property finance costs

Tax Tax exemption for certain income from property rental business, 12.5% for non property rental income

Tax exemption for capital gains, 33.0% for non property rental assets

Dividend withholding tax of 20.0%

Irish stamp duty of 1.0% apply to the purchase of shares in a REIT

Distribution requirements Property income: 85%

Capital gains: no distribution obligation

Summary of Irish REIT regime

Source: European Public Real Estate Association

Highly experienced management team…

37

WK Nowlan REIT Management

Breadth of skill set and experience encompassing institutional property management and development in prime and value add space, with strong relationships with key decision makers in banking and property

Kevin NowlanChief Executive Officer

Bill NowlanInvestment Director

Frank KennyDevelopment Director

Frank O’NeillChief Operations Officer

>20 years of

experience in the

Irish property

market

Previous positions

include Senior

Portfolio Manager at

NAMA, Portfolio

Manager at Treasury

Holdings and

Assistant Manager at

Anglo-Irish Bank plc

>40 years of

experience advising on

investment in Irish

commercial property

Previously Head of

Property Investment

of Irish Life from 1985

to 1995, the largest

property fund

manager in Ireland.

Established WK

Nowlan in 1995, one

of the largest property

asset managers in

Ireland

>35 years of

experience in the

Irish and US

property markets

Founder and CEO of

Willett Companies

LLC, boutique

investment company

which managed,

developed and/or

owned 2 million sq ft

of real estate

>20 years of

experience in the

Irish property

market

Previously, manager

of WK Nowlan

Property

Management

Division, covering

Irish and UK

properties

Tom Edwards-MossChief Financial Officer

Previously worked

for 9 years at Credit

Suisse in the

Investment Banking

Division with a

particular focus on

corporate finance in

the real estate sector

Qualified as a

Chartered

Accountant at PwC in

2005

Richard BallChief Investment Officer

>7 years of

experience in the

Irish property

market

Previous senior

positions within

Clancourt Group and

Michael McNamara &

Company

Spent three years

working in corporate

finance with BDO

where he qualified as

a Chartered

Accountant

APPENDIX

…with overview from a highly qualified Board and supported by WK Nowlan

38

Governance

Hibernia REIT plc

WK Nowlan is a property asset management company staffed by 26 full time property, financial and support staff

Team has a broad mix of skills covering all the key professional aspects of property management and development:surveyors and valuers, architects, engineers, portfolio managers and financial analysts

Capacity to execute multiple transactions simultaneously

Ability to manage complex commercial and residential projects

Selected clients include:Support

WK Nowlan Property

Danny KitchenNon-Executive Chairman

Stewart HarringtonIndependent Non-Executive Director

Terence O’RourkeIndependent Non-Executive Director

Colm BarringtonIndependent Non-Executive Director

Non-Executive Chairman of Workspace Group plc and Non-Executive Director of LXB Retail Properties plc

Previously Finance Director of Green Property plc

Non-Executive Director of BWG Group and Stafford Holdings and Director of Killeen Properties

Previously a Partner Jones Lang Wootton (now Jones Lang LaSalle) Founding Partner of Harrington Bannon Chartered Surveyors

Non-Executive Director of The Irish Times and Chairman of Enterprise Ireland

Non-Executive Chairman of Aer Lingus plc, Senior Independent Director of IFG Group plc and CEO & Director of Fly Leasing Ltd

Previously MD of Babcock and Brown in Ireland

Bill NowlanNon-Executive Director

Previously Head of Property Investment of Irish Life from 1985 to 1995, the largest property fund manager in Ireland

Previously a board member of the Chartered Accountants Regulatory Board and Managing Partner of KPMG Ireland

APPENDIX

Documents

Interim Results - Hibernia REIT plc/media/Files/H/Hibernia... · 2014-11-17 · (2) Once rent abatement period ends in September 2015 (3) Hibernia REIT has the right to take full