Hibernia REIT has had a busy second quarter of 2014 completing eight acquisitions totalling EUR267m, primarily in the central Dublin office sector.
These have come from both off-market and on-market purchases of both direct property and secured loans, utilising the management’s extensive network of contacts.
Hibernia’s property portfolio now comprises (by cost): 74 per cent central Dublin offices, two per cent central Dublin office development land, 21 per cent Dublin residential and three per cent Dublin industrial / logistics. It has a net initial yield of 4.1 per cent (4.7 per cent post rent frees and abatements).
Management believes the portfolio has strong potential for increases in rental rates in future.
The office space is over 99 per cent occupied on weighted average contracted rents of EUR33psf., well below current estimated rental values for prime central Dublin offices of EUR40-45psf., with rental values projected to rise further. Furthermore the portfolio has near term development opportunities from the completion of the 213 residential units at Wyckham Point, and in the medium term, the Windmill Lane and Gateway sites.
Following completion of the Guild House and Commerzbank House acquisition (announced on 15 July 2014) EUR336m has been invested since the IPO in December 2013 (over 90 per cent of net proceeds raised), with a further EUR63m committed.
Kevin Nowlan, chief executive officer, WK Nowlan REIT Management, the investment manager, says: “We are delighted with the progress we have made since our financial year end in March. We have now invested over 90 per cent of the funds raised at IPO in a portfolio consisting primarily of central Dublin offices with significant reversionary and value-add potential.
“We continue to see a very high level of transaction volumes in the Dublin office market: within this we are finding attractive acquisitions that meet our selection criteria, particularly in the off-market and loan spaces. We welcome the recent statement by the Minister for Finance regarding the acceleration of the National Asset Management Agency’s disposal programme which we believe will further increase the supply of available loan and property portfolios.
“Given the significant number of attractive investment opportunities, the company continues to consider all available funding options, including debt, equity and joint ventures, as would be expected in the ordinary course of business. The company will look to update the market as and when appropriate and remains confident it can create further shareholder value for its investors.”