Value of Hibernia Reit portfolio climbs to €1.3bn

Real estate investment trust Hibernia Reit is in talks to let two new office blocks due to be finished shortly, according to chief executive Kevin Nowlan.

The trust said that the value of its properties rose by 6.6 per cent to €1.308 billion from €1.17 billion over its financial year, which ended on March 31st, boosting its shares by 2.66 per cent to €1.544 by lunchtime on Thursday.

A €53 million hit from Minister for Finance Paschal Donohoe’s decision to treble stamp duty to 6 per cent in October’s budget left pretax profits trailing last year by 10 per cent at €107.1 million.

Profits included an €88 million gain on the value of its properties, which are mainly in central Dublin. “That would have been €53 million higher without the stamp duty increase,” Mr Nowlan explained.

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Hibernia will shortly finish work on Two Windmill Lane and One Sir John Rogerson’s Quay, part of its 400,000sq ft Windmill Lane Quarter. Mr Nowlan said it was weighing whether it should let each to a single tenant or to groups of businesses.

He pointed out that the company designed the buildings in the Windmill Lane Quarter to house clusters of businesses that could benefit from shared space and facilities in each.

Meanwhile, it is beginning work on the second phase of another development at Cumberland Place that will hold 50,000sq ft of offices.

Following that, Marine House on Clanwilliam Place, which Hibernia bought for €26.5 million, is likely to be its next development project.

The trust has applied to Dublin City Council for permission to extend the size of its proposals for the Harcourt Street Garda headquarters to 320,000sq ft from 270,000sq ft.

Brexit

Mr Nowlan said tech companies switching to Dublin from London ahead of Brexit were boosting demand for offices.

“We’ve had a phenomenal year of demand,” he said. “Tenants in the last 12 months leased 2.2 million square feet, 1.8 million square feet is going to be delivered in the city centre this year and already 70 per cent of it is pre-leased.” He added that the supply of new offices would slow next year.

Mr Nowlan warned that the housing crisis remained a threat to growth. He argued that it was time to review how Dublin was governed, saying the capital had four local authorities that “don’t talk to each other”.

The total return on Hibernia’s properties, that is net rental income combined with the increase in value, grew 11.6 per cent in the 12-month period against 6.8 per cent for the overall Irish commercial market.

The trust completed its first new development, 1WML – One Windmill Lane – in Dublin during the year, letting part of it to global law firm Pinsent Masons.

1WML and another development at two Docklands Central have a combined 197,000sq ft of offices, 96 per cent of which is let with tenants agreeing to pay a total of €11.5 million.

Its net rental income rose 15.1 per cent to €45.7 million from €39.7 million. New lettings and rent reviews could add close to €20 million to this total over the coming year, Mr Nowlan calculated.

Hibernia proposes to pay a final dividend of 1.9 cent a share, bringing the total for the year to three cent, a 36 per cent increase on the 2.2 cent a share it paid last year.

“Our portfolio returns significantly outperformed the Irish market, helped in particular by our office developments and our residential assets, and our growing rental income has enabled us to propose increasing the dividend for the year by 36 per cent,” Mr Nowlan said.