Hibernia REIT : Trading Update – February 2018

8 February 2018

Hibernia REIT plc ('Hibernia') today issues a trading update relating to the period from 1 October 2017 to date.

Highlights

• Record Dublin office take-up of over 3.5m sq. ft. in 2017 after new quarterly high in Q4
• Good progress made by Hibernia on lettings: in-place office portfolio vacancy rate reduced to 7% and will fall to 2% if all space currently under offer completes
• Three assets sold for €35.8m and 77 Sir John Rogerson's Quay ('77 SJRQ') acquired for €28.7m
• 1 Sir John Rogerson's Quay ('1SJRQ') and 2 Windmill Lane ('2WML') developments both on schedule for 2018 completions, discussions ongoing with potential occupiers

Occupational market update

Letting activity in the Dublin office market in 2017 reached a new high with take-up of over 3.5m sq. ft., following 1.6m sq. ft. of take-up in the final quarter (also a new record) as a number of large letting transactions were agreed. Office vacancy at the end of December 2017 stood at 3% for Grade A space in Dublin 2/4 and 6% for Dublin overall, with a further 1.2m sq. ft. of space reserved across the city. Prime Grade A headline rents in the city centre rose to €65 per sq. ft. in the quarter (source: CBRE).

Acquisitions and disposals

In December 2017 Hibernia agreed the sale of the Chancery, D8, for €23.8m. The price, which was modestly ahead of the September 2017 valuation, represented an ungeared IRR in excess of 17% on Hibernia's investment and the sale allows us to concentrate on opportunities with higher expected forward returns. In February 2018 Hibernia exchanged contracts to sell Hanover Street East and 11a Lime Street, two small properties in the South Docks with contracted rent of €0.2m per annum, for €12m, significantly ahead of their September 2017 valuation.

In February 2018 Hibernia agreed the acquisition of 77 SJRQ in the South Docks for €28.7m together with a simultaneous letting of the entire building to a subsidiary of International Workplace Group plc ('IWG') on a 25 year lease, with 15 years term certain. IWG will pay initial rent of €1.8m and will receive nine months rent free. Hibernia is acquiring the building vacant and expects to spend €0.5m on improvement works before IWG takes occupation in mid-2018.

Developments and refurbishments

Completion of Two Dockland Central ('2DC') occurred in November 2017, at which point the building was 77% let. In January 2018 the ground floor (13,000 sq. ft.) was let to HubSpot (already an occupier in 1DC and 2DC) on an 18 year lease at an initial rent of €52.50 per sq. ft. with six months rent free, taking occupancy in the building to 95%. The remaining vacant space is under offer with another occupier.

The committed developments at 1SJRQ and 2WML (formerly the Hanover Building) are on track for completion in Q3 and late 2018, respectively, and discussions continue with potential occupiers. Plans are also progressing for our development pipeline of five schemes.

Asset management

The vacancy rate in the in-place office portfolio now stands at 7%: the majority of this vacancy is in 1WML, most of which is now under offer. If all vacant space currently under offer in the in-place office portfolio completes, the vacancy rate will fall to 2%.

In January 2018, the 14 apartments in 1WML were let to City Break Apartments, a short and medium term residential letting provider, on a five year lease at a rent of €0.4m per annum.

Balance sheet

At 31 December 2017 Hibernia had net debt of €182m and cash and undrawn facilities of €263m (following disposal of the Chancery). Net of committed development spend, the acquisitions and disposals described in this trading update, payment of the interim dividend and the planned repayment of the 1WML loan facility (which occurred on 5 February 2018), cash and undrawn facilities totalled over €140m.

Kevin Nowlan, Chief Executive Officer of Hibernia, said:

'The quarter ended December 2017 saw a record level of take-up in the Dublin office market, resulting in 2017 exceeding the previous record year for leasing activity, and we have made good progress letting the available space in our portfolio: vacancy across our in-place offices now stands at 7% and will fall to 2% if we convert all space currently under offer. We have also sold the Chancery and our two properties on Lime Street and successfully recycled most of the proceeds into 77 Sir John Rogerson's Quay, where we expect greater future returns.

'Our two committed developments remain on track for completion in the second half of 2018 and we are working hard on progressing our exciting pipeline of future developments. With a favourable letting market, a strong balance sheet to exploit opportunities and an experienced team, we are optimistic for the future.'

ENDS

Contacts:
Hibernia REIT plc +353 1 536 9100
Kevin Nowlan, Chief Executive Officer
Tom Edwards-Moss, Chief Financial Officer

Murray Consultants
Doug Keatinge: +353 86 037 4163, dkeatinge@murrayconsultants.ie
Jill Farrelly: +353 87 738 6608, jfarrelly@murrayconsultants.ie

About Hibernia REIT plc
Hibernia REIT plc is an Irish Real Estate Investment Trust ('REIT'), listed on the Irish and London Stock Exchanges, which owns and develops Irish property. All of Hibernia's portfolio of properties is in Dublin and it specialises in city centre offices.

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