Windmill gain: Hibernia Reit may sell some of its property assets

Hibernia Real Estate Investment Trust (Reit) may look at selling some of its properties to other investors should it get the right opportunities, according to chief executive Kevin Nowlan.

Mr Nowlan was speaking after the company reported that the value of its properties rose 5.2 per cent to €1.27 billion in the six months ended September 30th, the first half of its financial year.

He indicated that Hibernia could sell or swap properties in the right circumstances. “Some of our assets have good long-term income and that’s really attractive to pension funds,” he said.

Mr Nowlan also said Hibernia could consider joint ventures with other businesses seeking to develop properties in Dublin.

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Up to last April, US private equity player Starwood was a joint venture with Hibernia on 1WML, part of its Windmill Quarter development between Hanover Street and Sir John Rogerson's Quay in Dublin.

Construction

Hibernia has spent some €200 million on construction over the last three years, much of it on the Windmill Quarter.

The company opened 1WML, the first building, in August. Marketing business Core Media, US software developer Informatica and lawyers Pinsent Mason have signed up as tenants.

Hibernia bought what is now 1WML for €24 million and spent €53 million redeveloping it. The company spent €119 million buying and rebuilding the other elements of the quarter.

The property investor, which focuses on buying and developing offices in Dublin, said that profit before tax in the first half more than doubled to €70.6 million from €32.4 million during the same period last year.

Hibernia’s interim results show the value of its investment properties increased to €1.265 billion on September 30th from €1.17 billion at the end of March.

The company noted that Minister for Finance Paschal Donohoe’s decision to treble stamp duty on commercial property deals from October would have reduced the value of its portfolio by €53.7 million.

The increase in the value of its properties aided the growth in profit before tax, as the figure includes both this and the rent that Hibernia earns by letting its properties.

Net asset value

Net income from rent during the period increased 31 per cent on its 2016 first half to €21.9 million from €16.7 million. Net asset value per share rose 6.2 per cent to €155.30 per share from the end of March.

The total return on its properties during the first half was 7.2 per cent, against an overall return on Irish property of 4.8 per cent.

Mr Nowlan remarked that the company was pleased to report a strong performance for the first half.

“Demand from domestic and international occupiers for office space in Dublin remains very strong,” he said, adding that 2017 is “likely to be close to a record year for office take-up, and we have started to see some Brexit-related openings”.

Hibernia believes that any Brexit spin-off for the Republic may come in two waves.

Mr Nowlan suggested that businesses, such as JP Morgan bank, that have already committed to moving here are taking office space now in order to be ready in case the United Kingdom leaves the European Union without a deal.

He explained that there could be a second push once the details of any agreement between London and Brussels are known closer to the UK's proposed March 2019 exit date.

The company's shares climbed 1.48 per cent to €1.445 in early trade on the Irish Stock Exchange after Hibernia published its results. Its stock dipped to €1.435 later in the day.