Source - RNS
RNS Number : 4944J
Green REIT PLC
12 September 2016
 



 

 

 

PRELIMINARY RESULTS FOR THE YEAR TO 30 JUNE 2016

 

ASSET MANAGEMENT FOCUS DELIVERS STRENGTHENED LONG TERM INCOME STREAM AND STRONG PERFORMANCE ACROSS ALL METRICS

 

NAV increase 16.5%; EPRA NAV per Share €1.52; Dividend up 188% to 4.6 cents per share

 

Dublin, 12 September, 2016 - Green REIT Plc, ("Green REIT" or the "Company"), the Irish property investment company, today announces its results for the year ended 30 June 2016.

 

The portfolio, which is dominated by high grade Dublin offices, is now valued at €1.24 billion, with the Company having recorded a strong performance across all key operational metrics during the period. The strategic focus will continue to be on driving risk adjusted returns for shareholders, through asset management, our development pipeline and increasing dividends, building on the total return of 17.7% delivered in the year to 30 June 2016. 

 


30 June 2016

30 June 2015

Change

Net Rent

€52.6m

€37.8m

+39%

EPRA Earnings

€24.8m

€10.5m

+137%

Net Profit

€145.5m

€156.7m

-7.2%

                                                                  




Basic NAV Per Share

153.9 cents

134.8 cents

+14.2%

EPRA NAV per Share

151.8 cents

132.1 cents

+14.9%

NAV

€1,048.0m

€899.3m

+16.5%

Total Return

17.7%

24.4%

-6.7%

Total Gearing

19.2%

9.5%

+9.7%





Basic EPS

21.5 cents

23.5 cents

-8.5%

EPRA EPS (Diluted, on Rental Profit only)

3.7 cents

1.6 cents

+131%

Proposed Dividend per Share

4.6 cent

1.6 cent

+188%

 

KEY FINANCIALS HIGHLIGHTS

 

§ 14.9% increase in EPRA NAV to €1.52 per share, underpinning a 17.7% total return in the period

 

§ Strong capital and income growth, with EPRA Earnings now contributing 17% of total profit

 

§ 10% increase in contracted annual rent to €61.3 million from 21 properties

 

§ EPRA EPS increase of 131% to 3.7 cents per share;  Basic EPS of 21.5 cents per share

 

§ Strong EPRA Earnings of €24.8 million, up 137% on prior year; Net profit of €145.5 million for the year

 

§ Total gearing remains low at 19.2%, with cash and undrawn facilities at year end of €121.4 million providing further capital for growth and development

 

§ 188% increase in proposed dividend to 4.6 cents per share reflecting strong performance in the period

 

STRATEGIC & OPERATIONAL HIGHLIGHTS

 

§ Asset Management - delivering increased rental profit and more secure income over the longer term

-     Lease renegotiations completed/agreed on €14 million, or 23% of total annual contracted rent, including leases with Vodafone Ireland and Pioneer Investments

-     €9.5 million of new annual rent secured through new lettings, the largest of which is to Fidelity International in George's Quay

-     56% increase in total WAULT, from 5 years at 30 June 2015 to 7.8 years currently

-     Continued low EPRA vacancy of 2% at 30 June 2016 (30 June 2015: 2%)

 

§ Development - substantial value-adding potential from pipeline

-     Solid progress at our four office sites, all on target for completion on schedule

-     Two industrial units completed on schedule and on budget at Horizon Logistics Park

-     Terms agreed for the single letting of 100% of 32 Molesworth Street on completion

-     Good momentum at Horizon Logistics Park, with speculative development of an additional unit to commence in October 2016

-     6.1 acres at Central Park and over 100 acres at Horizon Logistics Park available for potential future development

 

§ Acquisitions and Disposals - supportive of investment strategy, strengthening the portfolio

-     Acquisitions: Completed the acquisition of full control of Central Park in January 2016 and of One Albert Quay in Cork. Payments of €41 million made on One Albert Quay to 30 June 2016, with a further €10.4 million to be paid on or before March 2017

-     Disposals: four properties from the 'Glas' collection sold in H2, at a combined sale price of €74.7 million, versus a combined purchase price of €42.6 million, generating a profit before disposal costs of €32.1 million, or 75.3 % on cost 

 

§ Performance Fee of €13.9 million to be settled by issuing 9.5 million ordinary shares to the Investment Manager, in line with the total return threshold being exceeded in the year to 30 June 2016

 

PORTFOLIO OVERVIEW:

 

§ Portfolio now comprises 20 assets with a total floor area of 226,000 square metres (2.43 million square feet) (30 June 2015: 208,600 square metres (2.24 million square feet))

§ Significant Dublin focus (93% by portfolio value) and dominated by high grade Dublin office assets (73%)

§ Investment initial yield of 5.2%¹ on 30 June 2016 valuations (5.8%¹ at 30 June 2015 on 30 June 2015 valuations)

§ 98.3% EPRA occupancy rate (30 June 2015: 98.1%)

§ Value by sector: 78% offices, 15% retail, 2% industrial and 5% other

§ Yields:


On 30 June 2016 Values

On 30 June 2015 Values

Investment Initial Yield¹

5.2%

5.8%

Portfolio Initial Yield¹

4.7%

5.5%

¹ Calculated as contracted rent at 30 June 2015/16 over the June 2015/16 valuation plus notional purchaser's costs

 

§ Portfolio is 5% reversionary at 30 June 2016 (€61.3 million annual contracted rent versus €64.7 million annual ERV)

§ Diversified tenant base, with 41% of contracted rent from Financial Services, 23% from TMT and 18% from retail

§ Top 10 tenants account for 51% of contracted rent, with our largest tenant accounting for 12% of the total

 

 

 

Gary Kennedy, Chairman of Green REIT plc, commented: "The Board continues to focus on driving risk adjusted returns for shareholders through our clear and focused strategy. This has been another successful year for the Company, with dividend plans coming to fruition and our development projects on plan. We are confident in our business and our market and look forward to delivering shareholder returns in line with our target in the year ahead."

 

Pat Gunne, Chief Executive of Green Property REIT Ventures Limited, added: "Our strong results are a reflection of the continued growth in the Irish economy, and the prevailing low interest rate environment which is supportive of the commercial property industry both in Ireland and abroad. The 137% growth recorded in rental profits over the previous year allows us to achieve our dividend objectives ahead of schedule"

 

ENDS

 

Contacts

 

Green Property REIT Ventures (Investment Manager to the Company)

Niall O'Buachalla, COO

+353 (0) 1 2418400

 

FTI Consulting (IR and PR to the Company)

 

Dublin                                                                                                    London

+353 (0) 1 6633686                                                                            +44 (0) 20 7831 3113 

Jonathan Neilan                                                                                   Giles Barrie

Melanie Farrell                                                                                      Claire Turvey

 

[email protected] 

 

About Green REIT plc

Green REIT plc is an Irish Real Estate Investment Trust ("REIT") and is listed on the Irish and London Stock Exchanges. The Company was the first REIT established in Ireland following the introduction of REIT legislation by the Irish Government. The Company's stated strategy is to create a property portfolio consisting primarily of commercial property in Ireland to deliver income and capital growth through opportunistic investments, active property management and prudent use of debt finance. Please visit www.greenreitplc.com.

 

 

Note on forward-looking information

This Announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this Announcement. The Company will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.

 

Chairman's Report

 

DELIVERING ON OUR VISION

 

I am happy to communicate another strong set of results for the Company for the year to 30 June 2016.

 

During the year we further strengthened our portfolio through two strategic acquisitions, firstly the acquisition of full control of Central Park, increasing the Company's ownership from 50 to 100 per cent, and secondly the acquisition of One Albert Quay, Cork's flagship office building. We also disposed of four non-core properties in the period, acquired early in the recovery cycle, generating a profit on purchase price of 75 per cent.

 

The successful implementation of asset management initiatives during the year has strengthened our income, making it more secure and resulting in longer income streams for the Company. Our development pipeline will further enhance this income, with the Company completing two industrial units during the year and with the completion of two office buildings, at Central Park and 32 Molesworth Street, scheduled for December 2016. Construction of One Molesworth Street in Dublin's CBD is progressing well and on target, while construction of 4-5 Harcourt Road has recently commenced.  

 

The total return delivered to shareholders in the year to 30 June 2016 was 17.7%. Our main focus now in the year ahead is on continuing to deliver risk adjusted shareholder returns through the completion and letting of our development projects and increasing dividends to shareholders, while at the same time monitoring acquisition opportunities that fit with our investment strategy.

 

Ireland - Positive Macroeconomic Indicators

 

The Irish economy continues to experience strong growth. Ireland was the fastest growing economy in the EU in 2014 and 2015, and growth is expected to continue through 2016 and 2017 at levels well above the EU average. While export growth was the main driver of recent economic growth, growth in the domestic economy is now a greater contributor. The country's unemployment rate of 8.3 per cent is now below the EU average, having peaked at 15.2 per cent in early 2012, while the country's debt to GDP ratio continues to fall and is now below the EU average, with a minor government deficit expected for 2016 and a small surplus forecast for 2017. Long term interest rates remain low, while the Irish government 10 year bond rate stood at 0.50% at 30 June 2016, both of which are supportive of commercial property yields.

 

Asset Management

 

The year to 30 June 2016 was a busy one on the asset management front. The highlights of the period were the renegotiation of existing leases with Vodafone Ireland, our largest tenant, and Pioneer Investments, our fourth largest tenant, which along with other asset management initiatives have increased our rent weighted average unexpired lease term ('WAULT') by 2.8 years from 5 years at 30 June 2015 to 7.8 years at 30 June 2016. We also entered into new leases with Fidelity International with a term certain of 12 years. Our contracted annual rent is now €61.3 million, an increase of 10% on the €55.7 million of contracted annual rent at 30 June 2015.

 

Development

 

One of the key tenets of our investment strategy is to create value for shareholders through a prudent level of property development. We acquired five properties with development potential at early points in the Dublin real estate development cycle, with a view to obtaining the necessary planning consents and delivering new buildings at the right time and into what is a constrained Dublin office market with low vacancy rates and manageable future supply.

 

Our development programme has ramped up substantially in the period since 1 July 2015. We have started on site at 32 Molesworth Street, One Molesworth Street and 4-5 Harcourt Road, all office developments in Dublin City Centre. We started on site at Block H in Central Park in April 2015 and completion is on target for December 2016. We also completed our first two industrial units at Horizon Logistics Park during the period. We look forward to completing and letting these high quality buildings and expect that they will be a significant driver of shareholder returns.

 

Disciplined Balance Sheet Management

 

Our intended total gearing level continues to be 25 per cent. Our total gearing level has increased from 9.5 per cent at 30 June 2015 to 19.2 per cent at 30 June 2016, due mainly to debt funding of the acquisition of full control of Central Park and payments made in respect of One Albert Quay in Cork, which were offset by debt reduction from the application of property sale proceeds. We have further capital to deploy to fund our development projects and the balance of the One Albert Quay payments, which are more than adequately covered between the Company's cash resources and our available debt facilities, while remaining within our intended gearing level.

 

Financial Results and Position

 

Summary Financial Information

 

Balance Sheet:

30 June 2016

30 June 2015

Change

Total Property Value

€1,241m

€968m (i)

+28.2%

EPRA Net Assets

€1,048m

€899m

+16.5%

EPRA NAV Per Share

151.8 cents

132.1 cents

+14.9%

Total Gearing

19.2%

9.5%

+9.7%

Income Statement:




Gross Rental Income (excluding service charge income and JV income)

€56.4m

€39.4m

+43%

Profit for the Period

€145.5m

€156.7m

-7.2%

EPRA Earnings

€24.8m

€10.5m

+137%

EPS - Basic

21.5 cents

23.5 cents

-8.5%

EPS - EPRA

3.7 cents

1.6 cents

+131%

(i)            Includes the Company's 50% interest in Central Park property at 30 June 2015

 

 

 

 

 

 

Dividends

 

The Board expects to declare a dividend in respect of the year to 30 June 2016 of 4.6 cent per share, or a total dividend payout of €31.4 million, to be paid in the fourth quarter of 2016. This represents an increase in the annual dividend per share by 188 per cent on the dividend paid for the year to 30 June 2015, delivering on our promise to pay increasing dividends to shareholders.

 

The dividend expected to be declared is analysed as follows:

 


€MM

Cents Per Share

Property Income Distribution ('PID')

24.4

3.6

Non PID

7.0

1.0

Total Dividend

31.4

4.6

 

Net Asset Value ('NAV')

 

The key drivers of the increase in the Company's NAV by €148.7 million, or by 16.5 per cent, between 1 July 2015 and 30 June 2016, were EPRA Earnings for the period of €24.8 million (30 June 2015: €10.5 million) and a positive movement in fair values (including JV property) by €120.7 million (30 June 2015: €146.2 million).

 

The Investment Manager

 

The Board continues to work well with the Investment Manager, Green Property REIT Ventures, led by Pat Gunne. The quality of the acquisitions, the asset management successes achieved and the substantial progress made with the Company's development projects in the period are testimony to the skills and experience of the management team.

 

The Board has approved the payment of a Performance Fee of €13.9 million (30 June 2015: €20.9 million) to the Investment Manager, in line both with the formula set out in the Investment Manager Agreement entered into in July 2013 and the total return threshold being exceeded in the year to 30 June 2016. The Performance Fee will be settled by the issuance of 9,482,718 new ordinary shares to the Investment Manager by the Company. These shares will be subject to the lock-in provisions set out in the Investment Manager Agreement, which prohibit the sale of these shares for up to up to 42 months from their issue date.   

 

Outlook

 

Our clear strategic focus has continued to deliver strong shareholder returns in the year to 30 June 2016.

 

We have continued to grow the business through opportunistic and disciplined property acquisitions, which along with the disposals made in the period have strengthened the portfolio. Our income is stronger and our income streams are longer, as a result of active asset management. We look forward to the completion of our office and industrial developments and the contribution to shareholder returns from their anticipated value uplift and additional rental income. We remain conservatively leveraged with a strong balance sheet and well positioned to take advantage of opportunities that may arise.

 

The Board recognises that a continuation of the current favourable macroeconomic backdrop is an important dynamic in the context of delivering on our objectives, and that there are external factors which may impact on the Company's performance, such as economic and political uncertainty in Ireland and internationally.

 

We are vigilant in our risk management focus and continue to monitor the impact of the result of the UK's decision to leave the EU, both for opportunities for the Company and impacts on the wider Irish economy. We believe however that it is too early to tell what impact this may have on the Irish commercial real estate sector.

 

We remain confident in our business and our market and, having delivered above and beyond the targets set at IPO three years ago, we are confident that we have the right portfolio, business model, gearing profile, management expertise and financial capacity to continue to drive shareholder returns in the years ahead.

 

Gary Kennedy

Chairman

11 September 2016

 

Investment Manager's Review

 

Asset Management Successes, Capital Recycling and Good Progress with Developments

 

The year to 30 June 2016 was a very active one for us as the Company's Investment Manager. Implementation of asset management initiatives in the period has been very successful, enhancing the quality and security of our income. 60 per cent of the contracted income in the portfolio is on an upwards only review basis, with an overall weighted average unexpired lease term (WAULT) of 7.8 years at 30 June 2016, up by 56 per cent on 5 years at 30 June 2015. We also added €9.5 million of new contracted annual rent through new leases during the year, taking our total contracted annual rent to €61.3 million at 30 June 2016.

 

In addition, our estate is now 98% occupied, which highlights the security of income within the portfolio, and our active approach to managing any vacant space which becomes available. The quality of our assets is key to ensuring our void rates remain significantly below the wider market.

 

Our development projects are progressing in accordance with the plan we presented at the outset of our programme, and we are excited by the prospects that these buildings have for delivering strong returns to shareholders when completed and with tenancies secured. Our latest projections show a return on capital of 39% against the original underwrite target of 28%, so far exceeding our expectations, against a backdrop of very positive market conditions.

 

1.   ACQUISITIONS, DISPOSALS & PORTFOLIO SUMMARY

 

Portfolio further strengthened through two value adding acquisitions and €75 million of disposals

 

Central Park - acquisition of full control

 

In January 2016 the Company acquired full control of Central Park, widely acknowledged as Dublin's best office park, increasing the Company's ownership from 50 per cent to 100 per cent. This acquisition added €8.9 million to annual contracted rent, with a property price of €155 million reflecting a capital value of €4,600 per square meter (€428 per square foot) of built space and an equivalent yield of 5.6%. The Company also now has full control of the circa 46,500 square meters (500,000 square feet) of planning consents for future expansion of the office park. The value of 50 per cent of Central Park at 30 June 2016 was €172.9 million, reflecting an 11.5 per cent uplift on cost.

 

One Albert Quay, Cork - acquisition completed

 

In February 2016 we completed the acquisition of One Albert Quay in Cork, a newly built office block of 15,300 square meters (164,334 square feet). Since February 2016 we have made payments to the vendor totalling €41 million, as occupational leases have become operative. The building is now 81% let by area, with in-place annual contracted rent on the building of €3.2 million, compared to a total ERV of €4.4 million at 30 June 2016. The building houses the global headquarters of Tyco, together with other high quality tenants including Arup Engineering, PwC, Malwarebytes, Ardmore Shipping, Investec and Starbucks. We expect the remaining vacant space to be let over the coming months and will then make further estimated payments of €10.4 million on or before March 2017. The estimated total property price of €51.4 million compares to a valuation of €63.8 million at 30 June 2016, reflecting a 24 per cent uplift.

 

Along with JCD (the developer of the building) we are proud to report that One Albert Quay was awarded Commercial Project of the Year 2016 at the annual Irish Construction Awards, in recognition of its quality, environmental efficiency and technological advancement.

 

Disposals - 75% realised profit on cost

 

We outlined in February at our interim results our intention to raise €100 million from disposals. On 3 February 2016 we confirmed that we had appointed JLL to sell a portfolio of six of the Company's properties by private treaty on our behalf. In the period to 30 June 2016 four of these properties were sold, individually, for a combined value of €74.7 million. This compares to a combined cost of €42.6 million, reflecting a total profit on cost of €32.1 million or 75%. We are happy to have realised such a healthy profit from the completed sales, which we see as effective recycling of capital and a strengthening of our portfolio.  

 

2.   PORTFOLIO VALUATION

 

The valuation of the portfolio rose to €1.24 billion at 30 June 2016, which reflects a 13% increase on assets held throughout the period. Acquisitions in the period increased in value by €30 million between their acquisition dates and 30 June 2016, reflecting a combined 15% increase on property cost.

 

On a sectoral basis, the industrial assets saw a 44% increase in value, partly as a result of the completion of an industrial unit which had been under construction during the year and an increase in the value of the developable land. The city centre office portfolio saw a 13% increase in value, suburban offices saw a  14.5% increase and the retail assets held saw an 11% increase in value in the year.

 

In the period from June 2015 to June 2016 we saw the portfolio equivalent yield reduce by 50 basis points to 5%. This is partly as a result of extending the WAULT from 5 years to 7.8 years and also due to the various disposals and acquisitions in the period. The portfolio has gone from 72% prime to 93%.

 

Looking at the overall return from the portfolio, the movement in equivalent yield is contributing approximately 50% to returns with income and rental growth accounting for the remaining 50%. The rental growth component is pulled back somewhat by rent free periods given on new lettings and lease renegotiations, which will flow through in the coming months.


 

PORTFOLIO VALUATION ANALYSIS

 


June 2015 Valuation

Movement June 15 to Dec 15

December 2015 Valuation

Movement Dec 2015 to June 2016

June 2016 Valuation


Annual Movement to June 2016


€MM

€MM

€MM


€MM



Offices








Dublin City Centre

507.8

5.8%

537.0

6.9%

574.2


13.1%

Dublin Suburbs (including 50% interest in Central Park)

151.0

9.9%

165.9

4.2%

172.9


14.5%

Total Offices

658.8

6.7%

702.9

6.3%

747.1


13.4%

Mixed Use (Arena Centre, Dublin 24)

60.9

3.4%

63.0

-1.9%

61.8


1.4%

Industrial

26.2

10.8%

29.0

30.2%

37.8


44.3%

Retail

152.9

7.6%

164.4

2.9%

169.3


10.7%

Total - Assets Held Throughout the Period

898.8

6.7%

959.3

5.9%

1,015.9


13.0%









Investment and Disposals in H2 FY 2016:








Assets Disposals - Glas Collection

69.5

7.7%

74.9




N/A

Sale of 40% of 85-93 Mount Street





(11.5)


N/A

Acquisitions (see note below)





236.6


N/A

Per Statement of Financial Position

968.3


1,034.2


1,241.0











 

 

















Note - Acquisitions in the Period:

Acquisitions in the period


Property Price

Movement to June 2016

June 2016 Valuation



€M


€M

Other 50% of Central Park


155.0

11.5%

172.9

One Albert Quay, Cork


51.3

24.2%

63.7

Total - Acquisitions in the period


206.3

14.7%

236.6

 

 

3.   ASSET MANAGEMENT

 

The year to 30 June 2016 was one of heightened activity on the asset management front and our busiest period to date. We continue to focus on growing our rental income and enhancing the security of that income through driving the portfolio WAULT higher.

 

Highlights in the period include the following:

 

Lease Re-gears

 

We completed or agreed lease renegotiations on €14 million, or 23 per cent of our current contracted annual rent, significantly increasing the WAULT on this income by 7.4 years. This includes our single largest tenant, Vodafone, and our fourth largest tenant, Pioneer Investment Management.

 

Summary details are as follows:

 

Tenant

Building

Contracted Rent (€m p.a)

% of Group Rent*

Term Increase

Unexpired Term (pre)

Unexpired Term (post)

Vodafone Ireland

Central Park (Block E)

7.3

12%

+8 years

2.8 years

10.8 years

Pioneer Investments

George's Quay, D.2 (Block A)

3.4

6%

+10 years

1.3 years

11.3 years

Bank of Ireland

Arena Centre, D.24

1.4

2%

+5 years

2.1 years

7 years

The OPW (Irish govt)

84-93 Mount Street, D.2

1.7

3%

+5 years

0.1 years

5.1 years

 

* Total annual contracted rent at 30 June 2016

 

New Lettings

 

We secured new lettings with €9.5 million per annum of additional contracted rent over 25,111 square metres (270,300 square feet), which represents 15.5 per cent of the group's current contracted annual rent. The WAULT on these new leases is 10 years.

 

The largest of these is with Fidelity International at George's Quay. The Fidelity leases extend to 5,852 square metres (68,000 square feet) in total, which Fidelity will fully occupy by late 2016 when Twitter and Invesco vacate the space they currently occupy. The annual contracted rent from Fidelity is €3.7 million, on 25 year leases at a rent of €527 per square metre (€49 per square foot), with a break clause in the tenant's favour on the twelfth anniversary of the leases.

 

These new lettings were 8 per cent ahead of 30 June 2015 rental values (excluding short term lettings).

 

WAULT

 

§ In addition to the initiatives above, Allied Irish Banks did not exercise their lease break on 2 Burlington Road in the period, which added 10 years to the term certain of that €4.2 million of annual rent;

§ The combined effect on WAULT of the asset management initiatives completed in the period is to increase our overall WAULT by 56 per cent from 5 years at 30 June 2015 to 7.8 years at 30 June 2016; 

§ As at 30 June 2015, 58 per cent of our contracted annual rent had a break option or lease expiry in the years 2016 to 2018. This has now been reduced to 17 per cent as at 30 June 2016;

§ 83 per cent of our contracted annual rent is now subject to a break or expiry beyond 2019, which has increased from 42 per cent at 30 June 2015;  

 

Vacancy

 

As at 30 June 2016 there was 1.7 per cent vacancy across the portfolio by ERV (30 June 2015: 1.9%). Of the €1.2 million of annual ERV across our vacant space, €0.9 million of this is currently under offer and in legals.

 

4.   DEVELOPMENT PROJECTS

 

We continue to report good progress with our development projects, with two industrial units at Horizon Logistics Park completed in the period and with completion on target at Block H Central Park and 32 Molesworth Street for December of this year. One Molesworth Street is also progressing well and we recently commenced the demolition and redevelopment of 4-5 Harcourt Road.

 

A brief summary of these schemes is as follows:

 

Property

Use

Lettable Area (Sq Ft)

Start Date

Estimated Completion Date

Block H, Central Park

Office

150,000

April 2015

December 2016

32 Molesworth Street, D.2

Office

28,374

August 2015

December 2016

One Molesworth Street, D.2

Office

90,000

November 2015

Q2 2017

4-5 Harcourt Road

Office

48,243

September 2016

Early 2018

Horizon Logistics Park (units B1 & D1)

Industrial

44,000

August 2015

Completed May 2016

Total

 

360,617

 

 

 

 

 

 

 

 

 

 

Development activity since 30 June 2016:

 

(i)   32 Molesworth Street, Dublin 2

Terms have been agreed and legal discussions are now underway with a potential occupier to take a lease on 32 Molesworth Street, which has a targeted completion date of December 2016. The proposed letting covers the entire building of 3,000 square meters (32,000 square feet) and the proposed annual rent compares favourably with the original underwrite assumptions. This letting is subject to leases being signed and completion of the building.

 

(ii)  4-5 Harcourt Road

We are now on site and have commenced demolition at 4-5 Harcourt Road in Dublin's CBD. The planning permission we secured represents an increase of close to 50% on the original floor area. In its place we will be developing a modern office building of 4,500 square meters (48,200 square feet), with completion due in early 2018.

 

(iii) Horizon Logistics Park, Dublin Airport:

 

Pre-letting to Kuehne+Nagel

 

An agreement to lease has been signed with Kuehne+Nagel Limited for a new unit of 7,400 square meters (80,000 square feet) which we will build for them, with Kuehne+Nagel having options on two additional units of 3,700 square meters (40,000 square feet) each. Kuehne+Nagel are an existing tenant in the logistics park and will be vacating their unit as part of this transaction. The construction of the new units is subject to planning consent and discussions are now underway with the planning authority with a view to submitting an application by the end of October.

 

Kuehne+Nagel's expansion plans show their confidence in Horizon Logistics Park as their preferred location to conduct this very substantial corporate expansion. It also confirms the opportunity around logistics in the Dublin market, in addition to the wider prospects for the Irish economy. This, combined with a sale and lease on the two units which we developed, bodes well for our expansion strategy at Horizon Logistics Park. 

 

Letting of unit B1

 

Heads of terms have been agreed with a global logistics company for unit B1, which comprises 4,100 square meters (44,000 square feet). This unit was built speculatively and was completed in May 2016.     

 

Commencement of construction of unit B2

 

Construction will commence shortly on this unit, which comprises 3,066 square meters (33,000 square feet) and will be built speculatively. Given the momentum generated by the sale of unit D1, the pre-letting to Kuehne+Nagel and that heads of terms have been agreed on unit B1, we feel that it is important to the success of the park to have new space available for prospective tenants, in a sector where there are strong levels of take-up and very limited supply of modern high bay warehousing.


5.   FINANCIAL REVIEW

 

3 Year Summary

 

 

2016

2015

2014

NAV per Share (cents) - Basic

153.9

134.8

109.1

NAV per Share (cents) - EPRA

151.8

132.1

109.1

Earnings per Share (cents) - Basic

21.5

23.5

12.4

EPRA Earnings per Share (cents)

3.7

1.6

2.1

Total Gearing

19.2%

9.5%

9.2%

Property Loan to Value

20.6%

9.9%

18.6%

Interest Cover

9.5 times

19.6 times

7.4 times

Cash and undrawn facilities

€121.4m

€166.9m

€369.7m

Weighted average interest rate

1.9%

2.8%

3.2%

Weighted average debt maturity

4 years

3.1 years

4 years

 

NAV Growth

 

NAV increased from €899.3 million at 30 June 2015 to €1,048.0 million, or from 134.8 cent per share to 153.9 cent per share (both basic), an increase in NAV per share of 14.2% year on year. The main drivers of the growth in basic NAV per share are analysed as follows, in cents per share:

 

NAV Analysis

Year to 30.06.2016


€'000

Cents per Share

Net Assets at 30 June 2015

899,317

134.8

Investment Properties Revaluation

109,367

16.1

JV Property Revaluation

11,306

1.7

Net Rental Profit - Investment Properties

21,635

3.2

Net Rental Profit - JV Property

2,740

0.4

Performance Fee Share Reserve

13,893

2.0

Dividends Paid

Shares Issued During the Year

(10,671)

-

(1.6)

(2.7)

Others

454

0.1

Net Assets at 30 June 2016

1,048,041

153.9




 

Please see Appendix 1 for further EPRA Performance Measures.

 

Gearing

 

As at 30 June 2016 our total gearing was 19.2% (30 June 2015: 9.5%), with total bank debt increasing from €95.7m at 30 June 2015 to €255.4 million at 30 June 2016. This level of gearing is within the range guided to our shareholders over the previous reporting periods.

 

The increase in total bank debt by €159.7 million in the year was as a result of the debt financing of the Company's acquisition of PIMCO's 50% interest in Central Park, payments made in acquiring One Albert Quay in Cork and debt funding of development costs. This was offset by debt reductions from the application of property sales proceeds against the Barclays revolving credit facility.

 

 

Debt Profile

 

The Company has two loan facilities in place, one with Bank of Ireland secured on the Central Park assets, and a revolving credit facility with Barclays Bank Ireland plc with floating security over the Company's other assets. During the year the Central Park facility was renegotiated with Bank of Ireland, the key changes being a reduction in the loan margin from 3% to 2% per annum, thereby saving the Company €1.5 million annually, and an extension of the maturity date from June 2018 to June 2021, with options to extend by two further years.

 

As a result of the renegotiation of the Central Park facility and a reduction in the 3 month Euribor rate, the Company's all-in annual debt cost has reduced from 2.8% at 30 June 2015 to 1.9% at 30 June 2016, with an increase in total debt maturity from 3 to 4 years.

 

Post 30 June 2016, additional hedging was put in place in the form of forward starting interest rate swaps covering the period from October 2018 to October 2022, at a blended fixed rate of 0.074% per annum on €200 million. These swaps give the Company certainty around its maximum interest cost on €200 million of its debt for the period October 2018 to October 2022, at what we believe is a very keen fixed rate.

 

A summary profile of the Company's debt at 30 June 2016 is as follows:

 


Balance at 30.06.2016

Interest Cost

Annual Interest

Gearing - Property Only

Interest Cover

Maturity Date

Maturity - Years


€MM

% per annum

€MM

%

Times



Central Park Facility

150.0

2.00%

3.0

43.4%

5.2

Jun-21

5.0

Barclays Facility

105.4

1.72%

1.8

11.8%

30.4

Dec-18

2.5

Total

255.4

1.88%

4.8

20.6%

9.5


4.0

 

 

Earnings per Share ('EPS')

 

EPRA EPS, which measures EPS on rental profit only, increased by 2.1 cents per share or by 131% from 1.6 cents to 3.7 cents. In the year to 30 June 2015 EPRA EPS accounted for 7 per cent of total EPS of 23.5 cents, while it accounted for 17 per cent of total EPS of 21.5 cents in the year to 30 June 2016.

 

This is a reflection firstly of our increased rental income in the current year, which is 43 per cent greater than in 2015, and secondly of the anticipated moderation in capital value growth as the Irish commercial real estate market moved from 'opportunistic' mode to a mode of more sustainable and moderate growth. This is illustrated by the total returns from Irish commercial real estate as measured by IPD/MSCI, which decreased from 25 per cent in calendar 2015 to 19.5 per cent in the year to 30 June 2016.

 

 

 

 

 

 

 

 

A reconciliation of total profit and EPS to EPRA Profit and EPRA EPS is as follows:

 


30 June 2016

30 June 2016

30 June 2015

30 June 2015


€'000

Cents per Share

€'000

Cents per Share

Profit for the Period

145,502

21.5

156,703

23.5

EPRA Adjustment - fair value movements

(120,673)

(17.8)

(146,239)

(21.9)

EPRA Earnings

24,829

3.7

10,464

1.6

 

Rental Income

 

Gross and net rental income is analysed as follows:

 


2016

2015


€'000

€'000

Gross Rental Income

66,821

45,864

Less: Service Charge Income

(10,389)

(6,432)

Gross Rent excl Service Charge Income

56,432

39,432

Split as to:



Billed Rental Income

47,298

38,920

Spreading of lease incentives

6,241

512

Surrender Premia

 2,893

 0


56,432

39,432

Less: Property Outgoings

(3,883)

(1,613)

Net Rental Income

52,549

37,819

 

Gross rental income (excluding service charge income) of €56.4m in 2016 was 43% higher than 2015. It should be noted that the analysis above for 2016 includes rental income from Central Park from 8 January 2016 (the date the Company acquired full control) to 30 June 2016, whereas in 2015 there was no Central Park rental income included, as Central Park was separately accounted for on an equity basis during the period when the Company controlled only 50% of it.

 

An analysis of total gross rental income (excluding service charge income) with the Company's 50% share of the Central Park rent shown proportionately for the year to 30 June 2015 and for the period 1 July 2015 to 8 January 2016 is as follows:

 


2016

2015


€'000

€'000

100% Owned Properties

56,432

39,432

Central Park 50% (1/7/15 to 8/1/16)

4,418


Central Park 50%


7,733

Gross Rent incl Central Park

60,850

47,165

 

 

 

The main drivers of the increase in rental income year-on-year were as follows:

 

§ The acquisition of PIMCO's 50% interests in Central Park on 8 January 2016

§ The impact of the Sapphire Portfolio being owned throughout the year to 30 June 2016 but for only three quarters of the year to 30 June 2015 (George's Quay, George's Court and Westend Retail Park)

§ Surrender premia paid by departing tenants of €2.9 million

§ The impact of the spreading of lease incentives granted to tenants, which were €6.2 million in 2016 versus €0.5m in 2015. These arise mainly from the granting of new leases and the renegotiation of existing leases where rent free periods were granted. Under accounting rules we are required to smooth the effect of these incentives over the term certain of the leases.

§ There was a slight reduction in rents as a result of the redevelopment of One Molesworth Street and 4-5 Harcourt Road, totalling €1.1 million, as vacant possession of the buildings was required.

 

With regard to Property Outgoings, which increased from €1.6 million to €3.9 million in the year to 30 June 2016 as per the analysis above, the main driver of the increase was agents and legal fees on new lettings and on lease renegotiations, which totalled €1.4 million, with vacant building costs of €0.8 million, repairs of €0.4 million, valuation fees of €0.4 million and other costs of €0.9 million.

 

For the year ahead we would expect agents and legal fees on our built space to be lower given the significant level of lease events dealt with this year, as with vacant building costs on the basis of completing the transactions which are currently in legals. As our development properties complete and are leased we can expect to incur additional agents and legal fees.

 

Administrative Expenses

 

Administrative expenses increased by €0.6 million from €2.1 million in the year to 30 June 2015 to €2.7 million in the year to 30 June 2016. The main cost items within this caption are directors' fees, audit fees, tax compliance and advice fees, corporate insurances, depositary and other regulatory costs.

 

Within the €2.7 million total cost for the year to 30 June 2016 are €0.9 million of one-off business combination costs relating to the stamp duty, legal and other costs incurred in the acquisition of PIMCO's 50% interest in Central Park in January 2016. These costs are required to be expensed in the period in which they are incurred under accounting rules. Stripping out these one-off costs the total administrative costs for the year were €1.8 million compared to €2.1 million in the year to 30 June 2015.

 

Investment Manager Fees

 

The base fee charged in the year was €9.7 million (2015: €8.1 million), with the increase in the fee reflecting the increased NAV of the Company on which the base fee is calculated. In the year from 30 June 2015 to 30 June 2016 NAV increased from €899.3 million to €1,048.0 million. The base fee is calculated and paid calendar quarterly in cash on the NAV at quarter end, on the basis of one per cent per annum of NAV. The details of the performance fee provision for the year of €13.9 million (2015: €21 million) are set out in further detail in note 19 of these results.

 

 

 

 

 

 

 

 

6.   PRIORITIES FOR THE YEAR AHEAD

 

Our focus and priority for the year ahead is consistent with our previous messaging to shareholders which is all about maximising risk adjusted returns, and ensuring the portfolio is positioned to take advantage of the strong Irish economy and favourable real estate macro dynamics, particularly around falling interest rates and central bank policy.

 

Key for us is the completion and letting of our development projects in Dublin which will then allow us to reassess our risk positioning within the portfolio for the next phase, and at that juncture decide whether or not we pursue further development opportunities within the market. This decision will largely be dependent upon the supply and demand dynamics of the occupational market at that juncture, as well as the Irish economy and where it fits within the international GDP environment.

 

We are very happy with the quality of our real estate, and the security of income from our very strong tenant base, a result of our very successful active management campaign over the past 18 months in particular.

 

We are also pleased with the strong dividend proposed, and this will remain a key focus for us by continuing to drive strong rental profits through the portfolio.

 

The Irish economy is performing well on all key economic indicators, with growth well ahead of the EU average in the last three years, driven by both domestic demand and by FDI. The unemployment rate has almost halved since its peak and the Irish workforce is in excess of two million people for the first time since 2008.

 

The impact of the result of the UK referendum on EU membership ('Brexit') on the Irish economy and its consequences on Irish commercial real estate, whether positive or negative, is still unclear. This is likely to be the case in our view until Article 50 is triggered and negotiations take their course. There is speculation that Brexit could adversely impact on Irish economic growth, given for example the proportion of our exports directed at the UK. Brexit could however have a positive effect on Irish real estate, with potential relocations by UK tenants to Dublin and Ireland and increased FDI into Ireland rather than the UK. We continue to monitor the implications of Brexit closely for opportunities, and believe that our development pipeline and the quality of our existing properties puts us in a strong position to capitalise on opportunities that may arise.

 

Equally we will continue to monitor the taxation debate around Apple and other FDI clients operating in the Irish marketplace. We expect that Ireland will continue to compete successfully in the international arena for existing and future overseas corporates looking to use Ireland as their EU base for operations.

 

Demand in the occupational market has been resilient, with concerns about future Dublin office over-supply reducing, assuming no significant pull back in take up from FDI tenants in particular. This is an area that we devote a lot of time in understanding in order to ensure we can read the ever-changing dynamics of the occupational market. With regard to the investment market, we are seeing an increase in core capital flow to Ireland for prime assets, and with the continued decline in the risk free rate Irish commercial property yields still look attractive on a relative basis despite being close to previous cycle peaks.

 

We remain confident that our clear and focused strategy will continue to drive returns for our shareholders

 

                                                                       

Stephen Vernon                                                          Pat Gunne

Executive Chairman                                                      Chief Executive

Green Property REIT Ventures Limited                          Green Property REIT Ventures Limited

11 September 2016

 

Our Market

 

Economic Overview

 

Strong Economic Growth

 

The Irish economy continues to show strong and sustained growth, as it did in 2014 and 2015. The forecast is for 4.4% growth in 2016 and 3.1% in 2017, which means at this point, despite the uncertainty created by the "Brexit" referendum result in the UK, Ireland may well continue to out-perform relative to its European peers in the coming years. The composite PMI for August 2016 was 56.9, the strongest across developed economies surveyed.

 

Employment

 

The unemployment rate stood at 8.3% at the end of July, down from 8.6% in January 2016 or 9.5% at the end of July 2015. This compares to 4.9% in the US and the UK and 10.1% in the Euro area. The total number of people employed in Ireland is now above 2 million, compared to a high of 2.2 million in Q1 of 2008 and a low of 1.8 million in Q3 2012. There has been a shift from net emigration during the financial crisis to net immigration today. This is positive for the labour market as it should alleviate shortages in certain sectors and keep employment balanced, and thereby reduce the potential for wage inflation which has to date been muted, with average earnings up 1.1% in the year to Q1 2016, reflecting spare capacity in the labour market.

 

Foreign Direct Investment ('FDI')

 

In the period 2009 to 2014 Ireland was ranked 5th highest for FDI inflows in Europe and there is no doubt the level of investment in FDI in recent years has been vital to economic growth, employment levels, tax receipts and demand for office space. The level of FDI flows remains strong, with 2015 being a record year for FDI, and the Industrial Development Authority (IDA), which is charged with attracting and managing FDI in Ireland, sees a strong pipeline of further investment in the near term (they do not comment beyond the near term). Multinational enterprises today comprise over 10% of private sector employment in Ireland. So far in 2016 the IDA's job announcements have outpaced previous years. The leading FDI investments in 2016 were in the IT sector (Oracle, First Data, Facebook, Hubspot and Amazon) and the pharma and medical devices sector (Shire, Search Optics, OPKO, Eurofins and Lancaster).

 

Public finances continue to improve

 

Overall tax receipts were up 9.2% year on year for the first half of 2016. We have seen a continued approach by the Irish Government to be disciplined in spending, so while national budgets are now marginally expansionary, public finances continue to improve. In Q1 2016 there was a current account surplus of €9 billion. The government deficit at the end of 2015 was 1.5%, which is forecast to reduce to 0.3% by the end of 2016.

 

In addition, the national debt to GDP ratio for 2015 was 93.8% and has reduced further with debt reduction and with growth in GDP. Reduction in our national debt has had a positive impact on the rating of the country and our ability to borrow on the international markets. Bond yields continue to decline, with the 10 year rate currently standing at 0.5% at 30 June 2016.

 

Strong contribution from the domestic economy

 

With improving employment numbers and confidence re-emerging, domestic demand continues to improve, currently growing at 6% (quarter 1 2016). Consumer spending growth was 3.5% in 2015 and the forecast for 2016 is 3.7%. There is limited evidence of price inflation, which was +0.4% per annum as at June 2016.

 

The 2016 census in the Republic of Ireland confirmed that the population in Ireland grew by 3.7% in the period 2011 to 2016 and now stands at 4.67 million. Not surprisingly, the main increases have been in the main urban centres and counties adjacent to Dublin. The population of Dublin increased by 5.7% to 1.35 million and greater Dublin increased by 5.6% to 1.9 million in the five year period.

 

UK referendum result

 

The decision of voters in the UK to leave the European Union has created uncertainty across markets globally. It is too early to tell the extent of the impact of this decision in either the short or longer term, but it is clear that it will have an impact on the Irish economy.

 

On the positive side, there may be further FDI growth and relocation of business from the UK to Ireland, particularly because Ireland will be the only English speaking member of the EU post the UK's departure. This may result in job creation and increased demand for office and residential accommodation. In addition, there may be further demand from international capital for Irish real estate.  

 

On the negative side, Ireland and the UK are strong trading partners and we are not likely to have clarity on trading arrangements between both countries for some time. At present 18% of our total exports are to the UK. The food, manufacturing, tourism and transport sectors are likely to be affected most, depending on trade arrangements agreed between the UK and the EU. A weak sterling will put pressure on the retail sector, particularly in towns close to the border with Northern Ireland, and more importantly as price takers Irish exporters price in sterling and therefore their profitability will be affected unless they can adjust profit margins to compensate for the currency effect.  

 

Capital Markets

 

Over recent years bank de-leveraging has resulted in strong volumes of investment activity including asset sales of €4.6 billion in 2014 and €3.5 billion in 2015. As the banks and NAMA clear their inventory, volumes of loan books and asset sales from this source have declined. The first half of 2016 has seen a number of large property transactions (over €100 million) that have boosted transaction levels. Total spend in the period has reached €2.95 billion, which compares to €1.7 billion in the same period of 2015.

 

The top 10 deals in the first half of 2016 accounted for 63% of the total activity in the period and are summarised below:

 

Property

Sector

Price

(in €M)

Purchaser

 

Blanchardstown Town Centre

Retail

950

Blackstone Core Fund

One Spencer Dock

Office

242

AGC Equity Partners

Whitewater Shopping Centre

Retail

180

DEKA

The Oval, Ballsbridge

Mixed

140

Patrizia

Project Kells

Mixed

93

Meyer Bergman/BCP

LXV, St.Stephen's Green

Office

85

CNP Assurance

Central Quay, Dublin

Office

51

Hibernia REIT

Golden Island Shopping Centre, Athlone

Retail

44

Credit Suisse

Royal Hibernian Way, Dawson St, Dublin

Mixed

32

Friends First

8 Hanover Quay, Dublin

Office

32

BNP Paribas

Others

 

1,101

 

TOTAL

 

2,950

 

Due to two large shopping centre deals, the retail sector has dominated demand, accounting for 49% of transactions, followed by offices at 36%, mixed use at 9% and the remaining 6% divided split between residential, industrial, hotel and other.  The USA continue to be the largest buyer group accounting for 34.3% of transactions, followed by domestic buyers (including Irish REITS) at 30%, European investors at 18.6%, UK buyers at 12.5%, and the remainder accounting for 4.6%. The profile of the buyer group has very much transitioned from private equity to long term core buyers, which is typical when the cycle moves from opportunistic to stable.

 

Property Returns

 

The MSCI index recorded total returns for H1 2016 for Ireland of 6.3% across all property sectors, which compares to 2.2% in the UK. On an annualised basis to June 2016 this reflects 19.5% compared to 25% in the calendar year 2015 and 40% in 2014. These moderating returns reflect where we are in the current cycle and demonstrate that we have now moved from an opportunistic phase (post the financial crisis) to a stabilised phase.

 

Over the longer term, average annual total returns per IPD/MSCI have been as follows:

 

3 year

5 year

10 year

Dec 1994-June 2016

26.4%

16.8%

2.4%

11.3%

 

Of the total return in H1 2016, capital growth accounts for 3.9% and income return for 2.3%. By sector the top performer with total returns of 10.8% was industrial, followed by offices at 6.1% and retail at 6.2%. The MSCI all-property equivalent yield remains stable at 5.8% (it was also 5.8% at the end of 2015).

 

Over the last six months, prime yields have remained stable; prime offices remain at 4.50-4.65% (depending on property commentator), prime high street at 3.25% and prime retail warehousing at 5%. Prime industrial is currently 5.75%, and this is the only sector where property commentators are anticipating further yield compression.

 

Occupier Markets

 

Dublin Offices

 

Total take-up in H1 2016 in Greater Dublin reached 90,000 square meters (965,000 square feet). On an annualised basis this would equate to 177,000 square meters (1.9 million square feet) in gross terms. In the period 2006 to 2016 the overall annual take-up averaged 167,000 square meters (1.8 million square feet), so while current take-up levels are down on the same period in 2015 of 111,500 square meters (1.2 million square feet), they are still running ahead of the long-run average. In addition, we understand that there are a number of potential lettings in due diligence so the anticipation is for a strong second half of the year.

 

The city centre, as expected, accounted for the bulk of activity with 84% of the take-up in the period, with 58% of this in the Dublin 2/4 postcode. Outside the CBD, the south suburbs accounted for 69% of take-up.

 

 

 

 

 

 

 

Gross take-up by sector was as follows:

 

Dublin City Centre

 

Sector

% of Total Take-Up

TMT

33%

Banking and Finance

16%

Service Industries

16%

Business Services

8%

Education, Health and Social

8%

Manufacturing

6%

Professional Services

4%

Public Administration

4%

Other

5%

Total

100%

 

Dublin South Suburbs

 

Sector

% of Total Take-up

TMT

29%

Manufacturing Industrial & Energy

26%

Business Services

18%

Financial Services

13%

Professional

8%

Consumer Services & Leisure

3%

Public Sector/Regulatory Body

3%

Total

100%

 

There has been a steady decline in the greater Dublin vacancy rate which now stands at 8.3%, down from 8.7% in December 2015 and 9% at June 2015. The Dublin 2/4 vacancy rate currently stands at 6.1% (June 2015: 7.1%) and the grade A vacancy rate is 2.4% (June 2015: 1.8%). The vacancy rate in the south suburbs is at 10.4%, compared to 12% in Q2 2015. Grade A vacancy rates in the south suburbs are now being measured, and as at Q2 2015 they stand at 6.8%.

 

There is currently 409,000 square meters (4.4 million square feet) of office development under construction in the city centre in 30 schemes, of which 66% are speculative. Eleven of these developments are due to complete during the course of 2016, providing approximately 121,000 square meters (1.3 million square feet) of new build/refurbishment. In addition, 16,000 square meters (170,000 square feet) has already been completed to date in 2016. The majority of the remainder will complete between 2017 and 2018.

 

Looking beyond 2018, there are a number of sites with planning permission in place, particularly in the docklands area, which would suggest that further development could be mobilised should demand necessitate, however many developers appear to be either waiting for pre-lettings or to secure funding, which is delaying commencement. NAMA continues to hold a number of key sites in the docklands and it is not clear when these sites will be sold and subsequently built out by the purchasers.

 

There is still limited speculative development in the Dublin suburbs. As at June 2016 there is a total of 49,000 square meters (528,000 square feet) is under construction in the Dublin suburbs, in two projects, namely Microsoft's new headquarters which extends to 35,000 square meters (378,000 square feet) and which they are building for their own occupation, and our scheme at Central Park where we have 13,935 square meters (150,000 square feet) under construction. Recently completed schemes added 20,400 square meters (220,000 square feet) of new space.

 

Prime headline rents in Dublin city centre have grown 4.5% in the six months to June 2016 and currently stand at €618 per square meter (€57.50 per square foot) and in the south suburbs rents have remained stable at €296 per square meter (€27.50 per square foot). While leasing activity is down on the same period last year, tenant demand appears to remain robust and market commentators are still suggesting rents will get to €699 per square meter (€65 per square foot) by year end and to €726 per square meter (€67.50 per square foot) by the end of 2017.

 

Cork Office Market

 

The lack of new development continues to hamper take-up levels in Cork. In H1 2016, take up reached 6,100 square meters (65,650 square feet) (which if annualised would be 12,200 square meters (131,300 square feet)) compared to 22,100 square meters (237,800 square feet) in calendar year 2015. Tenant demand remains strong, albeit much of the FDI demand is for smaller suites. The issue facing the Cork market is a lack of modern space. While the office vacancy rate is 18.6%, much of the space is obsolete or requires a total refurbishment in order to let it. At present there is only one new building under construction, the Capital Cinema site which will provide approximately 1,860 square meters (20,000 square feet) of retail and 4,650 square meters (50,000 square feet) of offices. This is scheduled for completion in Q1 2017.

 

There are a number of sites for office development in the city centre and suburbs of Cork, however most developers are seeking pre-lettings in order to commence development and these are rare in the Cork market.

 

Rents for buildings in the city centre completed post 2000 are in the order of €215 per square meter (€20 per square foot). One Albert Quay, our only building in Cork, which is considered the best office building in the city by some margin, is now commanding rents of €296 per square meter (€27.50 per square foot) and the Capital Cinema scheme is likely to be marketed at a quoting rent of €323 per square meter (€30 per square foot). 

 

Retail

 

Consumer confidence has continued to grow, reflected in Government tax receipts which were up 10.5% in the year to the end of 2015. The Central Stastistics Office in Ireland has confirmed that retail sales have seen 31 successive months of expansion, with retail sales up 8.1% in the year to May 2016. Car sales have been one of the strongest performers, up 24% year on year as at end June. When the motor trade is excluded, retail sales are up 6.5% in the same period.  While retail sale volumes are now only 3.3% off peak levels, the value of retail sales is still 17.6% off peak, which would suggest the consumer is benefitting from some imported deflation and discounting.

 

In addition, tourism figures are positive, up 10.3% in the year to May 2016, with the North American market up 19.3%, the UK market up 9.3% and the European market up 9.2%. While these numbers look strong a weak Sterling is likely to impact on travellers from the UK and over the medium term there are concerns that BREXIT may have a negative impact on tourism.

 

The retail real estate sector continues to improve. Prime retail is performing strongest, hampered only by limited vacancy on the prime high streets and shopping centres. There are some retailers looking to expand in multiple locations, typically in the café/restaurant and value sectors, but with limited demand from fashion occupiers. In addition, there is reasonable tenant demand for retail parks, albeit by a small pool of tenants. Rental growth is becoming more evident and not just for prime Dublin retail. Partly as a result of rents coming off such a low base and partly due to limited vacancy, the agents are reporting rental growth of 10-15% in provincial locations, depending on the location.

 

Some of the notable announcements in the period include John Lewis opening their first store in Ireland, taking space in the Arnotts department store on Henry street, and IKEA are rolling out a new click and collect concept with a 1,400 square meter (15,000 square feet) unit in Carrickmines Retail Park.

 

Development in the retail sector is limited. The only new scheme currently under construction is the western end expansion of Liffey Valley shopping centre in the western suburbs of Dublin, which is nearing completion. Lettings have been agreed there with Penneys, Cosmo, TGI Friday and Prezzo.

 

Industrial

 

Take-up in H1 2016 was 1.29 million square feet, down 35% on levels achieved in the same period of 2015. Demand remains at similar levels and property agents are suggesting there is currently in the order of 121,000 square meters (1.3 million square feet) of live demand. However, a shortage of supply of modern premises is restricting options and many occupiers are having to choose the design and built route in order to satisfy the requirements.

 

As was anticipated, rental growth has now emerged in this sector. In the six months to June, prime industrial rents rose by 12.9% and currently stand at €85 per square meter (€7.90 per square foot). By year-end the forecasts are for rents to increase to €94 per square meter (€8.70 per square foot) which could mean rental growth for the calendar year of up to 24.3%. 

 

At present we are the only developer building speculatively in the market, having just completed 4,100 square meters (44,000 square feet) at Horizon Logistics Park. With rents now starting to rise and the shortage of modern space clearly evident, it is likely that others will follow over the latter have of 2016 and into 2017.

 

The data centre market continues to see ongoing activity. Microsoft has obtained planning permission to develop four new data centres in Dublin and planning has also been granted for a new data centre in Cork.

 

Finally, while investment into the industrial sector is popular, particularly with Irish pension funds, the availability of product to buy is limited. In H1 2016, only 1% of transactions were accounted for by industrial property.

 

 

 

 

 

 

 

References

-       CBRE Research Reports& Research department

-       JLL Research Reports & Research department

-       Savills Research department

-       SCSI/MSCI Ireland Quarterly Property Index

-       Investec Irish Economy research reports 2016

-       Goodbody Irish Economy research reports 2016

-       Davy Irish Economy research reports 2016

-       Focus Economics

-       IDA Ireland

-       Central Statistics Office of Ireland

 

 

PORTFOLIO OVERVIEW

 

1.         LOCATION

 

As at 30 June 2016, 93% of the portfolio is located in Dublin city centre and greater Dublin, with the remaining 7% located in Cork (One Albert Quay, 5%) and Limerick (Parkway Retail Park, 2%). This is in line with the Company's investment strategy to build a portfolio which would be predominantly Dublin and selectively Cork, Limerick and Galway.

LOCATIONS BY VALUE (1)

 



Net Value

€m

% of Group Total


Dublin 2/4


567.6

46%


Greater Dublin


584.6

47%

Dublin Total


1,152.2

93%

Cork (100%)


63.8

5%

Limerick


24.7

2%

Total Portfolio


1,240.7

100%

 

(1) Net of costs. Valuation as at 30 June 2016. Includes 100% of One Albert Quay, Cork

 

 

2.         SECTOR SPLIT

 

The portfolio is split 78% offices, 15% retail, 2% industrial and 5% other (including residential and a hotel) by value. This is broadly in line with our original investment strategy of building a portfolio comprising predominantly offices (60%-70%), up to 25% retail and up to 15% industrial. Being ahead of the suggested office weighting is intentional, in that we believed that Dublin offices would perform best as a sector, which is proving to be the case. With regard to the weighting of industrial property, we have now completed two new units at Horizon Logistics Park, where the land is zoned for logistics warehousing and has capacity for up to 93,000 square meters (1 million square feet) of future development. We will soon be commencing the construction of another unit of 33,000 square feet and have agreed terms with Kuehne & Nagel to build them a new 7,400 square meter (80,000 square feet) unit with options to build two further units of 3,700 square meters (40,000 square feet) each. The allocation to industrial is therefore likely to increase as we build out the park.

 

SECTORS BY VALUE (1)



Net Value

€m

% of Group Total


Office

Dublin CBD (2/4)

562.3

45%



Greater Dublin

348.6

28%


Cork (100%)

63.8

5%

Office Total


974.7

78%

Retail


181.5

15%

Industrial


23.6

2%

Other


60.9

5%

Total Portfolio


1,240.7

100%

 

(1) Net of costs. Valuation as at 30 June 2016. Includes Green REIT's 60% in Mount Street property and 100% of One Albert Quay (Cork) (contracted to purchase)

 

 

3.         RENT & ERV

 

The portfolio was 5% reversionary at 30 June 2015, with annual portfolio contracted rent of €61.3 million compared to an annual ERV of €64.6 million. Total annual passing rent of €45.9 million at 30 June 2016 will step up to €61.3 million on the expiry of rent free periods granted on new and renegotiated leases and other abatements granted to tenants.  

RENTAL INCOME (1)



Passing

Rent
€m pa

Contracted Rent
€m pa

ERV (2)
€m pa

Variance

v ERV


Vacant

ERV

€m pa

Office

Dublin CBD (2/4)

16.3

24.4

27.7

-12%


<0.1


Greater Dublin

16.8

20.8

22.3

-7%


-


Cork

0.0

3.2

3.5

-8%


-

Office Total


33.1

48.4

53.5

-10%


-

Retail


10.5

10.7

8.8

+23%


0.8

Industrial (3)


1.3

1.3

1.3

-2%


0.3

Other


1.0

0.9

1.1

-18%


-

Total (Let Properties Only)

45.9

61.3

64.7

-5%


1.2

 

(1) Includes Green REIT's 60% in Mount Street property and One Albert Quay (Cork) acquired portion only

(2) Excludes ERV of development assets which are 1 & 32 Molesworth Street, Harcourt Road and Block H Central Park

(3) Unit B1 (new build) completed but vacant. ERV reflected in the above

On a sectoral basis, within the retail portfolio there remains an amount of over renting (23% at 30 June 2016 versus 28% at 30 June 2015), as this sector has only started to turn the corner and rental growth is yet to emerge. The contracted rent from the retail element is €10.7 million per annum (average €23.29 per sq. ft.) compared to an ERV of €8.8 million per annum (average €19 per sq. ft.). Helpfully the WAULT on our retail income is 8 years.

 

On the office side the Dublin CBD portfolio currently has a contracted rent of €24.3 million per annum (average €42.27 per sq. ft.) compared to an ERV of €27.6 million (average €48.21 per sq. ft.), and there is also further reversionary potential from the Greater Dublin office and Cork (One Albert Quay) elements of the portfolio.

CONTRACTED RENTS VERSUS ESTIMATED MARKET RENTS (ERVs) (1)



Average

Contracted Rent

€psf

Average

ERV

€psf

Variance

(v ERV)

Office

Dublin CBD (2/4)

42.27

48.21

-12%


Greater Dublin

21.69

23.68

-8%


Cork

23.35

25.19

-7%

Office Total


29.36

32.78

-10%

Retail


23.29

18.97

+23%

Industrial


7.12

7.29

-2%

Total (Let Properties Only)

26.27

27.78

-5%

 

(1) Let properties only. Excludes car space rent (where applicable)

 TOP 10 OCCUPIERS BY CONTRACTED RENT (1)

The table below shows that our top 10 tenants account for 48% of the annual contracted rent. The top ten tenants include Vodafone, Allied Irish Banks, Fidelity International and Pioneer Investments.

 

 Tenant

Business

Sector

Contracted Rent

€m pa

% of

Group Rent

Unexpired Term

(years) (3)






Vodafone Ireland

TMT

7.3

12%

10.3

Allied Irish Bank

Banking

4.5

7%

10.7

Fidelity International (2)

Financial Services

3.7

6%

11.4

Pioneer Investments

Financial Services

3.4

6%

10.7

Ulster Bank

Banking

2.8

5%

4.2

The Commissioners of Public Works Ireland (OPW)

Public Administration

2.7

4%

4.2

Northern Trust

Financial Services

1.9

3%

2.2

Bank of America Merrill Lynch

Financial Services

1.7

3%

1.7

Tyco

TMT

1.7

3%

11.6

GAM

Financial Services

1.4

2%

5.9

Top 10 Tenants


31.1

51%

8.3






Remaining tenants


30.2

49

%

7.3






Total Portfolio


61.3

100%

7.8

 

(1) Includes Green REIT's 60% in Mount Street property and One Albert Quay (Cork) acquired portion only

(2) Includes Fidelity second lease contracted at €2.3m pa commencing in November 2016 

(3) Unexpired Term/ WAULT is the rent-weighted average remaining term on leases to lease expiry/ break date (whichever comes first). Excludes residential component in Arena Centre

 

4.         TENANT BUSINESS SECTORS

 

The portfolio has a diversified income base with a high quality tenant mix. As at 30th June 2016, 98% (measured by ERV) of the portfolio was occupied, with the banking/financial services sector where the largest concentration is, accounting for 41% of our annual contracted rent.

 

 

 

 

 

 

 

 

 

 

CONTRACTED RENT BREAKDOWN BY TENANT BUSINESS SECTORS (1)



Contracted Rent

€m pa

% of

Group Rent


Banking/ Financial Services

25.0

41%


Professional Services

1.7

3%

Technology, Media and Telecommunications ('TMT')

14.0

23%

Retail Trade

11.3

18%

Public Administration

(Irish Government)

3.8

6%

Other

5.5

9%

Total Portfolio


61.3

100%

 

(1) Includes Green REIT's 60% in Mount Street property and One Albert Quay (Cork) acquired portion only

 

 

 

5.         WAULT & VACANCY

 

The weighted average unexpired lease term (WAULT) from the portfolio is 7.8 years, up 56% from 5 years at 30 June 2015. This increase in WAULT was brought about by the renegotiation of some of our key leases (e.g. Vodafone and Pioneer Investments) and the granting of new leases to the likes of Fidelity International in George's Quay.

LEASE LENGTHS & VACANCY



WAULT

(years) (1)

Vacancy

(by floor area)

Vacancy

(by ERV)

Office

Dublin CBD (2/4)

7.8

-

<1%


Greater Dublin

7.5

-

-


Cork

10.8

-

-

Office Total


7.9

-

-

Retail


8.0

2%

1%

Industrial


5.0

2%

<1%

Other


5.6

-

-

Total Portfolio


7.8

4%

2%

(1) Unexpired Term/ WAULT is the rent-weighted average remaining term on leases to lease expiry/ break date (whichever comes first). Excludes residential component in Arena Centre


APPENDIX 1 - EPRA PERFORMANCE MEASURES

Measure


Definition of Measure

Jun-16

Jun-15

EPRA earnings

€'000

Recurring earnings from core operational activities

24,894

10,464

EPRA earnings per share

Cents

EPRA earnings divided by the weighted average basic number of shares

3.7

1.6

Diluted EPRA earnings per share

Cents

EPRA earnings divided by the diluted weighted average number of shares

3.7

1.6

EPRA Cost Ratio

%

Administrative and operating costs divided by gross rental income

11.2%

8.6%

EPRA Net Asset Value

€'000

Net assets adjusted to exclude the fair value of financial instruments

1,048,023

899,261

EPRA Net Asset Value per share

Cents

EPRA net assets divided by the number of shares at the balance sheet date on a diluted basis

151.8

132.1

EPRA Triple Net Asset Value

€'000

EPRA net assets amended to include the fair value of financial instruments and debt

1,048,041

899,317

EPRA Triple Net Asset Value per share

Cents

EPRA triple net assets divided by the number of shares at the balance sheet date on a diluted basis

151.8

132.1

EPRA Net Initial Yield (NIY)

%

Annual passing rents at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property, increased by (estimated) purchasers' costs.

3.2%

5.0%

EPRA Topped-up NIY

%

EPRA NIY adjusted for the expiration of rent free periods (or other unexpired lease incentives such as dicounted rent periods and step rents.)

4.4%

5.3%

EPRA Vacancy Rate

%

ERV of non-development vacant space as a percentage of ERV of the whole portfolio of non-development space

2%

2%

 

 

 

APPENDIX 2 - ASSET MANAGEMENT INITIATIVES - 1 JULY 2015 TO 30 JUNE 2016 (1)

Property

Tenant

Term Certain (years) 5

Area

(Sq. Ft.)

Contracted Rent €m pa

Contracted Rent (2)  € psf

Jun '15 ERV
€m pa

Jun '15 ERV (2)

€ psf

Variance

 

LEASE RE-GEARS:








Central Park (100%)

Vodafone

+10

263,000

7.3

24.75

7.5

25.00

-1%

George's Quay

Pioneer

+10

62,782

3.4

50.77

3.2

47.50

+7%

Mount Street

OPW

+5

49,353

1.7

35.32

2.3

44.87

-21%

Arena Centre

Bank of Ireland

+7 (3)

63,586

1.4

20.34

0.9

12.00

+70%

College Green

Starbucks

+10

2,280

0.2

--

0.1

--

+69%

Total (Re-gears)

+7.4

441,001

14.0

29.29

14.0

28.67

-

NEW LETTINGS/ RENEWALS:








One Albert Quay

7 tenants to include Tyco, Arup, PWC and others

+11

(average)

133,295

3.2

23.35

3.2

23.35

--

George's Quay

Fidelity (4)

+12

71,592

3.7

49.00

3.3

43.53

+12%

George's Quay

RBC Dexia

+10

16,651

0.9

49.88

0.8

46.73

+6%

George's Quay

Informatica

+1.5

9,510

0.5

47.50

0.5

46.00

+3%

Various Leases

10 leases

+5.3

(average)

37,296

0.8

21.80

0.9

24.14

-9%

Various Licences

16 licences

Short Term

1,982

0.4

--

<0.1

--

+830%

Total (New lettings/ renewals)

+10 (6)

270,326

9.5

32.48 (6)

8.8

31.10 (6)

+8%

 

 

 

 

BREAK OPTIONS NOT EXERCISED:








2 Burlington Road

Allied Irish Bank

(EBS Limited)

+10

85,266

4.2

--

--

--

--

Various

9 tenants

+3.2

88,042

1.4

--

--

--

--

Total (Break option not exercised)

+8.3

173,308

5.6

--

--

--

--

(1) Completed lettings but excludes deals in legals and deals completed for assets sold in the period. Residential element of Arena Centre excluded

(2) Car spaces excluded on rent psf calculations

(3) Bank of Ireland re-gear include term extension for five years with two year's rent equivalent break penalty on next break

(4) Fidelity second lease contracted with commencement date in November 2016

(5) Unexpired Term/ WAULT is the rent-weighted average remaining term on leases to lease expiry/ break date (whichever comes first). Excludes residential component in Arena Centre

(6) Calculations excludes licences

 

Principal Risks 

The Board takes the view that adequately identifying and managing the risks to achieving our strategic objectives is key to the successful delivery of shareholder returns. The Board has divided the principal risks into External Risks, over which we have no influence, and Internal Risks, which we can influence, which are set out below.   

External Risks

Risks

Potential Impact

Mitigation Measures

Direction of Risk

Cyclical Market - the property market is cyclical and as such values and market conditions can be volatile.

Potential adverse impact on property values and rental levels, impacting shareholder returns.

 

ü 93% concentration of our assets in Dublin, the capital city, which experiences less volatility in a downturn than regional centres in Ireland

ü Our assets are in prime and good secondary locations, which are more resilient in a downturn

ü 73% of our portfolio by value is Dublin offices, which proved to be the most resilient asset class in the last downturn

ü Our retail assets are in city centres and well-populated suburban areas

ü Our warehousing and distribution facilities are located in close proximity to airport and motorway infrastructure

ü Our vacancy rate by ERV is low at 2%, thereby reducing the leasing risk in the event of a downturn

ü We continue to focus on capturing the longest lease terms possible from well capitalised and stable tenants so that the security of income and cash inflow is optimised

ü The WAULT of our income is 7.8 years

ü The Investment Manager is experienced in managing property portfolios through cycles

ñ Both rents and yields for Dublin offices are relatively stable, having improved rapidly in landlords' favour since 2013 as economic recovery took hold. Rent and yields for retail and industrial  continue to improve for landlords, while the spread between Irish property yields and the risk free rate are at historical highs, which is supportive of property yields.

Slowdown in economic  growth - as a very open economy, the Irish economy is highly dependent on the wider European market and indeed the world economy.

 

Any slowdown or reversal in current trajectory of economic recovery could reduce the demand for space in our buildings and impact on rental values and property values, while increasing the level of tenant default.

ü The Company's acquisition strategy focused on city locations, primarily Dublin, as the large centres of population are more resilient economically, particularly for retail

ü The Company also targets well capitalised tenants with strong covenants and maintains a policy of keeping a large and diversified multi sectoral customer base to avoid the Company being over exposed to any one tenant or industry sector

ü The Investment Manager's asset management team is highly experienced

ò Ireland's economic recovery is now firmly established, although there are increased concerns surrounding global economic growth prospects, which have been heightened by the result of the UK referendum on EU membership.

Speculative Development Risk - occupiers don't take space in our new developments.

Adverse impact on revenue, cashflow, value and void costs.

 

 

 

 

 

 

 

 

ü We are early movers in the development of new space in Dublin in order to benefit from lower construction costs and to deliver completed properties when the demand for space outstrips supply and rental values remain strong

ü While a property may not be let when a development or refurbishment commences, the marketing of the building commences well before the scheduled completion date. We could choose to start the letting process earlier if deemed to mitigate risk further

ü The Investment Manager and the Board monitor changing market conditions carefully

ñ As the Company has now commenced 5 developments, one of which has completed, the risk level here has increased. Letting terms have been agreed for one of the buildings under development, and take-up in the occupational market remains robust.

Political Risk - potential adverse impact from 'Brexit'

The UK referendum result in June 2016 to leave the EU could have an adverse impact on the Irish economy. We currently export a high proportion of our manufactured goods and our services to the UK. Given the potential barriers that could arise if Britain becomes a non-EU territory, the impact on the Irish economy could be significant, thereby adversely impacting the real economy and the prospects for our tenants with a reliance on exports to the UK.

 

The Board of the REIT is monitoring this closely. It is too early to tell what the impact will be and whether it will be a positive or negative one for Ireland and for the Company.

 

ñ This risk has increased since our interim results now that the result of the referendum is known.

Regulatory Risk - AIFMD - The Investment Manager is the authorised AIFM of the Company, under recently adopted EU regulations.

Should the Investment Manager cease to be authorised as an AIFM then the Company would be required to appoint a replacement AIFM and may suffer losses arising from the transition from its current Investment Manager to another.

ü The Board and the Audit Committee regularly discuss regulatory aspects and receive reports from the Investment Manager in respect of AIFMD compliance matters concerning both the Company and the Investment Manager. The Investment Manager in turn consults with its legal adviser and the Company's sponsor, Davy, who attend meetings with the regulator on behalf of the Investment Manager and the Company respectively

ü The Company obtains independent legal advice in relation to AIFMD matters in order to keep abreast of developments and to ensure compliance by the Company with its obligations under AIFMD  

ü The Company has appointed a Depositary, Northern Trust, as required of it under AIFMD

ñ The regulatory framework is continually evolving.

Interest Rate Risk - global interest rates are currently at record low levels but may increase in the short to medium term.

An increase in interest rates could have an adverse impact on the Company's property values, as the risk premium applied to property yields would increase.

ü The Investment Manager is experienced in monitoring the property market through cycles

ü Our assets are well located and focused on Dublin offices, with quality tenants and with a focus on security of rental income, which should make them more resilient in the event of yield increases caused by increases in interest rates

ü In the event that some of our assets were to be sold, their quality, location and the quality of the tenant and income stream should make them desirable to purchasers

ñ With US interest rates expected to rise in the short term, this risk has marginally increased, but Euro and UK rates are expected to stay lower for longer.

 

 

Internal Risks

 

Development Completion Risk - engineering, construction and other risks that could delay completion and/or increase costs.

Potential adverse impact on shareholder returns as a result of higher costs and/or delays in delivering new product into a supply constrained market.

 

 

ü The Company only employs blue chip contractors with a strong and proven track record and with requisite financial strength

ü The Company engages what it considers to be the best design team for each project, working closely with them to identify any cost overruns or delays as early as possible

ü The Investment Manager closely monitors each project and works closely with the contractor, attending on site regularly

ü The Investment Manager's development team is highly experienced in developing new buildings 

ñ The Company is on site at 4 locations and therefore the risk level here has increased.

 

Development - Health and Safety - with increased development activity there is an increased risk of an accident which could result in the death or injury.

Reputational risk, potential completion delay and potential financial loss arising from a claim being made.

 

 

ü The Investment Manager ensures that all contractors engaged employ high standards of health and safety and carry the appropriate levels of insurance to mitigate any issues which could arise.

ü The Investment Manager is an experienced developer with formalised health and safety procedures. 

ü The primary responsibility for health and safety passes from the Company to the main contractor, with sub-contractors engaged by the contractor having no privity with the Company. 

ü There is adequate insurance cover in place to deal with any claims which might arise out of claims being made due to incidents. 

ñ This risk has increased as the Company has now embarked on a development program which involves a significant amount of construction activity.

Development - Main Contractor or Subcontractor failure

Delayed delivery of a development or refurbishment with resulting additional costs, and potential failure to pass the completed space to a tenant who has entered into a pre-letting agreement, thereby delaying rental income receipts. 

ü The Company only selects financially robust contractors to carry out works

ü The principal contractor is responsible for monitoring the viability of sub-contractors appointed by them

ü The Company allows for timing contingencies as well as possible cost contingencies at the project planning phase

 

ò As the general economy has improved the risk of a sub-contractor or main contractor failing is reducing.

 

Financial Statements

Green REIT plc

Unaudited consolidated statement of comprehensive income

 



Year Ended 30 June 2016

Year Ended 30 June 2015


Notes

Underlying pre-tax

Capital and other

Total

 

Underlying pre-tax

Capital and other

Total

 



€'000 ¹

€'000

€'000

€'000 ¹

€'000

€'000









Gross rental and related income

3

66,821

-

66,821

45,864

-

45,864



             

             

             

             

             

             









Net rental and related income

3

52,549

-

52,549

37,819

-

37,819









Net movement on fair value of investment properties

4

-

109,367

109,367

-

113,803

113,803

Profit on development services


519

-

519




Investment Manager








  - base fee

19

(9,669)

-

(9,669)

(8,104)

-

(8,104)

  - performance fee

19

(13,893)

-

(13,893)

(20,982)

-

(20,982)

Administrative expenses


(2,708)

-

(2,708)

(2,137)

-

(2,137)



             

             

             

             

             

             

Operating profit


26,798

109,367

136,165

6,596

113,803

120,399

Finance income

5

-

-

-

95

-

95

Finance expense

5

(4,644)

-

(4,644)

(1,245)

-

(1,245)

Share of joint venture profit

9

2,740

11,306

14,046

5,018

32,436

37,454



             

             

             

             

             

             









Profit on ordinary activities before taxation


24,894

120,673

145,567

10,464

146,239

156,703

Income tax

7

(65)

-

(65)

-

-

-



             

             

             

             

             

             









Profit for the year after taxation


24,829

120,673

145,502

10,464

146,239

156,703

Other comprehensive income


-

-

-

-

-

-



____________

____________

____________

____________

____________

____________

Total comprehensive income for the year attributable to the shareholders of the Company


 

24,829

 

120,673

 

145,502

 

10,464

 

146,239

 

156,703



________

_________

_________

________

_________

_________

Basic earnings per share (cents)

Diluted earnings per share (cents)

14

 

 

 

 

21.5

21.4

 

 

 

 

23.5

23.4



________

_________

_________

________

_________

_________

 

The accompanying notes are an integral part of these financial statements.

¹ As outlined in note 1. 

 

 

 


Green REIT plc

Unaudited consolidated statement of financial position

as at 30 June


2016

2015

Note

€'000

€'000




8

1,240,712

817,326

9

-

77,874



                  

                  






1,240,712

895,200



                  

                  




11

14,271

2,631


76,839

37,611



                  

                  






91,110

40,242



                  

                  






1,331,822

935,442



                

                




12

68,087

66,697

12

637,533

617,941

12

13,893

20,982


328,528

193,697



                  

                  






1,048,041

899,317



                  

                  








2,613

2,248

16

28,220

14,454



                  

                  






30,833

16,702



                  

                  




18

252,948

19,423



                  

                  










252,948

19,423



                  

                  






283,781

36,125



                 

                 






1,331,822

935,442



                

                





15

153.9

134.8



                

                

15

151.8

132.1


                

                

The accompanying notes are an integral part of these financial statements.


 

 

 

Green REIT plc

Unaudited consolidated statement of changes in equity

 


 

 



Performance

 

 


 

 

Share

Share

fee share

Retained

 


 

 

capital

premium

reserve

earnings

Total


 

 

€'000

€'000

€'000

€'000

€'000









At 30 June 2014



66,697

617,941

-

43,129

727,767

Total comprehensive income for the year








Profit for the year to 30 June 2015



-

-

-

156,703

156,703

Transactions with owners, recognised directly in equity








Investment Manager - performance fee share reserve



-

-

20,982

-

20,982

Dividends paid



-

-

-

(6,135)

(6,135)




                

                

                

                

                









At 30 June 2015



66,697

617,941

20,982

193,697

899,317

Total comprehensive income for the year








Profit for the year to 30 June 2016



-

-

-

145,502

145,502

Transactions with owners, recognised directly in equity








Investment Manager - performance fee shares issued



1,390

19,592

(20,982)

-

-

Investment Manager - performance fee share reserve



-

-

13,893

-

13,893

Dividends paid



-

-

-

(10,671)

(10,671)




                

                

                

                

                









At 30 June 2016



68,087

637,533

13,893

328,528

1,048,041




                

                

                

                

                

The accompanying notes are an integral part of these financial statements.

 

                                                                                                                                             

                                                                                                                                             


Green REIT plc

Consolidated statement of cash flows

for the year ended 30 June 2016 and the year ended 30 June 2015


 

2016

2015


Note

€'000

€'000

Cash flows from operating activities

 



Profit for the year

 

145,502

156,703

Adjustments for:

 



-    Net movement on revaluation of investment

 



properties

8

(109,367)

(113,803)

-    Finance income

5

-

(95)

-    Finance expense

5

4,644

1,245

-    Profit from joint venture

9

(14,046)

(37,454)

-    Investment Manager - performance fee

19

13,893

20,982


 

                  

                  


 

40,626

27,578

Changes in:

 



-    trade and other receivables

11

(6,840)

(711)

-    current liabilities and base fee due

16

8,318

2,258


 

                  

                  

Cash generated from operating activities

 

42,104

29,125

Interest received

5

-

95

Interest paid

 

(3,997)

(1,032)


 

                  

                  

Cash inflow from operating activities

 

38,107

28,188


 

                  

                  

Cash flows from investing activities

 



Acquisition of investment properties

 

(43,384)

(372,639)

Acquisition of subsidiary, net of cash acquired

10

(77,726)

-

Distribution from joint venture

9

(3,061)

1,464

Investment in joint venture

9

630

-

Withdrawals from money market funds

 

-

351,649

Capital expenditure

 

(22,638)

(2,182)

Proceeds from sale of investment properties

8

73,583

-


 

                  

                  





Net cash used in investing activities

 

(72,596)

(21,708)


 

                  

                  

Cash flows from financing activities

 



Dividends paid

 

(10,671)

(6,135)

Drawdown of overdraft facility

 

-

18,010

Repayment of overdraft facility

 

-

(18,010)

Costs associated with Bank of Ireland refinancing

 

(665)

-

Drawdown of revolving credit facility

 

116,203

20,746

Costs associated with Barclays facility

 

-

(1,536)

Repayment of revolving credit facility

 

(31,150)

-


 

                  

                  





Net cash inflows from financing activities

 

73,717

13,075


 

                  

                  





Net increase in cash and cash equivalents

 

39,228

19,555

Cash and cash equivalents at beginning of year

 

37,611

18,056


 

                  

                  

Cash and cash equivalents at 30 June 2016

 

76,839

37,611


 

                  

                  

The accompanying notes are an integral part of these financial statements.


Green REIT plc

Notes

 

Notes to the Financial Statements

 

1      Basis of preparation and significant accounting policies

 

Statement of compliance

 

Basis of preparation and significant accounting policies

The financial information in this announcement was approved by the Board of Directors on 11 September 2016 and does not comprise statutory financial statements for the year ended 30 June 2016, within the meaning of the Companies Acts 2014. The statutory financial statements for the year to 30 June 2016 will be finalised based on the financial information presented in this preliminary announcement and will be delivered to the Companies Registration Office in due course.

 

Statement of compliance

These unaudited consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union (EU IFRS), which comprise standards and interpretations approved by the International Accounting Standards Board (IASB), and the Companies Act 2014.

 

The following new standards and amendments were adopted by the Group for the first time in the current financial reporting period with no significant impact on the Group's result for the period or financial position:.

·    Annual Improvements to IFRSs 2010-2012 cycle (effective date 1 February 2015)

 

A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 30 June 2016, and have not been applied in preparing these consolidated financial statements. The items that may have relevance to the Group are as follows:

·    Annual Improvements to IFRSs 2012-2015 cycle (effective date 1 January 2016) *

·    IAS 1 (amended) - Presentation of financial statements (effective date 1 January 2016)*

·    IAS 27 (amended) - Separate financial statements (effective date 1 January 2016)*

·    IFRS 10 (amended) - Consolidated financial statements (effective date 1 January 2016)*

·    IFRS 11 (amended) - Joint arrangements (effective date 1 January 2016)*

·    IFRS 15 - Revenue from contracts with customers (effective date 1 January 2018)*

·    IFRS 9 - Financial Instruments (effective date 1 January 2018)*

·    IAS 7 (amended) - Statement of Cash Flows (effective date 1 January 2017)*

·    IFRS 2 (amended) - Classification and measurement of share-based payment transactions (effective 1 January 2018)*

·    IFRS 16 - Leases (13 January 2016) (effective 1 January 2019)*

* Not EU endorsed at the time of approval of these financial statements

 

The Group is in the process of assessing the impact of the new standards and interpretation on its financial reporting and currently intends to apply the new requirements once they are endorsed by the EU.

 

The accounting policies set out below have been applied to the consolidated and Company financial statements.

 

 

 

 

Green REIT plc

Notes (continued)

 

1      Basis of preparation and significant accounting policies (continued)

 

Going concern

 

The Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future and that it is appropriate to prepare the consolidated financial statements on a going concern basis.

 

Basis of measurement

 

The consolidated financial statements have been prepared on the historical cost basis except for investment properties, short term investments and derivatives, which are measured at fair value.

 

        Functional and presentation currency

 

The financial information is presented in Euro, which is the Company's functional currency.  All financial information presented in Euro has been rounded to the nearest thousand except when otherwise indicated.

 

Underlying pre-tax earnings

 

The European Public Real Estate Association (EPRA) has issued Best Practices Recommendations, the latest update of which was issued in December 2014, which give guidelines for performance measures.  EPRA Earnings is the profit after tax excluding investment and development property revaluations and gains or losses on disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation. EPRA Earnings will also include earnings from non-property operating activity should a real estate company be involved in such an activity. Underlying earnings consists of the EPRA Earnings measure.

 

Use of estimates and judgements

 

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.  Actual results may differ from these estimates.

 

Estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.

 

Information about critical judgements in applying accounting policies that have the most significant effect on amounts recognised in the consolidated financial statements is included in the accounting policies and the notes to the financial statements. 

 

The key accounting judgement and estimate in these financial statements is the valuation of the property portfolio.  This is discussed in further detail under the accounting policy for property valuation and in note 8.

 

 

 

Green REIT plc

Notes (continued)

 

1      Basis of preparation and significant accounting policies (continued)

 

Measurement of fair values

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

 

A number of the Group's accounting policies and disclosures require the measurement of fair values.  When measuring the fair value of an asset or liability the Group uses market observable data as far as possible.  Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

 

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

 

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

 

Basis of consolidation

 

The Group's financial statements consolidate the financial statements of the Parent and of all subsidiary undertakings together with the Group's share of the results and net assets and joint ventures made up to 30 June 2016. The results of subsidiary undertakings acquired or disposed of in the year are included in the Group income statement from the date of acquisition or up to the date of disposal.

 

Control

 

The IFRS 10 control model focuses on whether the Group has power over an investee, exposure or rights to variable returns from its involvement with the investee and ability to use its power to affect those returns. In particular, IFRS 10 requires the Group to consolidate investees that it controls on the basis of de facto control. In accordance with IFRS 10, the Group's assessment of control is performed on a continuous basis and the Group reassesses whether it controls an

investee if facts and circumstances indicate that there are changes to one or more of the elements of the control model.

 

 

 

 

 

 

 

Green REIT plc

Notes (continued)

 

1      Basis of preparation and significant accounting policies (continued)

           

Subsidiaries

 

Subsidiaries are entities controlled by the Group (control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity). The financial statements of the subsidiaries are

included in the consolidated financial statements from the date that control commences until the date that control ceases.

 

Joint Arrangements

 

Under IFRS 11, Joint Arrangements, the Group classifies its interests in joint arrangements as either joint operations or joint ventures depending on the Group's rights to the assets and obligations for the liabilities of the arrangements. When making this assessment, the Group considers the structure of the arrangements, the legal form of any separate vehicles, the contractual terms of the arrangements and other facts and circumstances. When the Group has rights to the assets and obligations to the liabilities, relating to an arrangement, it accounts for each of its assets, liabilities and transactions, including its share of those held or incurred jointly, in relation to the joint operation. When the Group has rights only to the net assets of an arrangement, it accounts for its interest using the equity method. Investments in joint ventures are accounted for using the equity method and are recognised initially at cost. The cost of such investments includes transaction costs.

 

Transactions eliminated on consolidation

 

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

 

Business Combinations

 

The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

 

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

 

 

 

 Green REIT plc

Notes (continued)

 

1      Basis of preparation and significant accounting policies (continued)

 

Investment properties

 

Investment property is property held either to earn rental income, or for capital appreciation (including future re-development) or for both, but not for sale in the ordinary course of business. The Group does not have any properties held for resale or trading purposes.

 

Investment property is initially measured at cost including related acquisition costs and subsequently valued by professional external valuers at their respective fair values at each reporting date.  The difference between the fair value of an investment property at the reporting date and its carrying value prior to the external valuation is recognised in profit or loss as a fair value gain or loss.

 

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.

 

Properties leased out to tenants under operating leases are included in investment property in the statement of financial position.

 

Investment properties are treated as acquired at the point where the Group assumes the significant risks and returns of ownership which normally occurs when the conveyancing contract has been performed by both buyer and seller and the contract has been deemed to have become unconditional and completed.  Investment properties are deemed to have been sold when the buyer has assumed the risks and rewards of ownership and the contract has been completed.

 

Additions to investment properties consist of construction and other directly attributable costs such as professional fees and expenses and in the case of investment properties under development capitalised interest where applicable.  The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.  Where the Group begins to redevelop an existing investment property the property continues to be held as an investment property.

 

Properties that are currently being developed or that are to be developed in the near future are held as development properties.  These properties are initially valued at cost.  Any direct expenditure on development properties is capitalised and the properties are then valued by external valuers at their respective fair value at each reporting date.

 

The cost of properties in the course of development includes attributable interest and other associated outgoings.  Interest is calculated on the development expenditure by reference to specific borrowings, where relevant, and otherwise on the average rate applicable to short-term loans.  Interest is only capitalised where development activity is taking place.  A property ceases to be treated as a development property on practical completion.

 

External, independent valuers, having appropriate recognised and relevant professional qualifications and recent experience in the location and category of property being valued, value the Group's property portfolio at each reporting date, in accordance with the Royal Institution of Chartered Surveyors Valuation Standards (RICS). 

 

 

 

Green REIT plc

Notes (continued)

 

1      Basis of preparation and significant accounting policies (continued)

 

Investment property (continued)

 

Critical accounting judgements and key estimations of inherent uncertainty in investment property valuations

 

The fair values derived are based on anticipated market values for the properties, being the estimated amount that would be received to sell the assets in an orderly transaction between market participants.

 

The valuation of the Group's investment property portfolio is inherently subjective as it requires among other factors, assumptions to be made regarding the ability of existing tenants to meet their rental obligations over the entire life of their leases, the estimation of the expected rental income in to the future, an assessment of a property's ability to remain as an attractive technical configuration to existing and prospective tenants in a changing market and a judgement to be reached on the attractiveness of a building, its location and the surrounding environment.  While these and other similar matters are market standard considerations in determining the fair value of a property in accordance with the RICS methodology they are all subjective assessments of future outturns and macro-economic factors which are outside of the Group's control or influence and therefore may prove to be inaccurate long term forecasts.

 

As a result of all of these factors the ultimate valuation the Group places on its investment properties is subject to some uncertainty which may not turn out to be accurate, particularly in times of macro-economic volatility.

 

The RICS property valuation methodology is considered by the Board to be the valuation technique most suited to the measurement of the fair value of property investments.  It is also the primary measurement of fair value that all major and reputable property market participants use when valuing a property investment.

 

Rental income

 

Rental income from investment property is recognised on an accruals basis as revenue on a straight-line basis over the term of the lease.  The Group considers this is the most representative systematic time pattern in which the benefits of ownership of the assets will accrue to the business. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

 

Where a rent free period is included as an incentive in a lease the rental income foregone is allocated evenly over the period from the date of the lease to the earliest termination date of the lease.  Where a lease incentive takes the form of an incentive payment to a tenant the resultant cost is amortised evenly over the remaining life of the lease to its earliest termination date.

 

Contingent rents, such as turnover rents, and indexation adjustments are recorded as income in the periods in which they are earned.  Rental concessions are recorded as adjustments to income in the rental periods to which the concession relates.

 

A rent adjustment or review due under a lease which has not yet been settled at the reporting date is included in the results based upon a reasonable estimate of the amount the review will be settled at and then adjusted to actual outcome when the outstanding review is finally established.

 

 

Green REIT plc

Notes (continued)

 

1      Basis of preparation and significant accounting policies (continued)

 

Rental Income (continued)

 

Where the Group receives a surrender premium from a tenant for the early termination of a lease, the profit net of any direct costs associated with dilapidation and legal costs relating to that lease, is reflected in the accounting period in which the surrender took place.

 

Details on all rental incentives are provided to the external valuers for their consideration during their review of the investment property valuation at each reporting date.

 

Service charge income is recognised in the period in which it is earned.

 

Finance income and finance costs

 

The Group's finance income and finance costs comprise interest income, interest expense and related charges.  Interest income or expense is recognised using the effective interest method.

 

Tax

 

Current tax

 

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

 

Deferred tax

 

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

 

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

 

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse using tax rates enacted or substantively enacted at the reporting date.  

 

Financial instruments

 

Non-derivative financial assets

The Group initially recognises loans and receivables on the date that they are originated.  All other financial assets (including assets designated as at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

 

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.  Any interest in such transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

 

Green REIT plc

Notes (continued)

 

1      Basis of preparation and significant accounting policies (continued)

 

Financial instruments (continued)

 

Non-derivative financial assets (continued)

The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets.  At 30 June 2016 the Group had the following non-derivative financial assets, which are classified as loans and receivables:

 

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.

 

Trade and other receivables

Trade and other receivables are initially recognised at fair value, which is usually the original invoiced amount and subsequently carried at amortised cost using the effective interest method less provision made for impairment, if applicable.

 

The fair values of trade and other receivables are estimated at the present value of future cash flows, discounted at the market rate of interest at the measurement date.  Short-term receivables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial.  Fair value is determined at initial recognition and, where appropriate for disclosure purposes.

 

Non-derivative financial liabilities

All financial liabilities are recognised initially on the trade or origination date, which is the date that the Group becomes a party to the contractual provisions of the instrument and are measured initially at fair value less initial direct costs and subsequently measured at amortised cost.

 

Fair value is calculated, for period end disclosure purposes, based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the measurement date.

 

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

 

Derivative financial instruments

Derivatives are recognised initially at fair value; any directly attributable transaction costs are recognised in profit or loss as they are incurred.  Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.

 

Green REIT plc

Notes (continued)

 

1      Basis of preparation and significant accounting policies (continued)

 

Financial instruments (continued)

 

Share capital

 

Ordinary shares

Ordinary shares are classified as equity.  Incremental costs directly attributable to the issue of ordinary shares are charged to the profit and loss account reserve.

 

Share based payments - performance fee

 

The performance fee arrangement between the Company and the Investment Manager is accounted for as an equity settled share based payment arrangement.  The Company estimates the grant date fair value of each equity instrument and the number of equity instruments for which the service and non-market performance conditions are expected to be satisfied, resulting in the initial estimate of the total share based payment cost which is expensed over the vesting period.  

 

Subsequent to initial recognition and measurement, the estimate of the number of equity instruments for which the service and non-market performance conditions are expected to be satisfied is revised during the vesting period, that is, the period from 1 July to 30 June.  Ultimately, the share based payment cost is based on the fair value of the number of equity instruments issued upon satisfaction of these conditions.

 

 

2      Operating segments

 

The Group is organised into four business segments, against which the Group reports its segmental information, being Retail Assets, Office Assets, Industrial Assets and Other Assets (properties that do not fall into the preceding classifications).  All of the Group's operations are in the Republic of Ireland.  Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who has been identified as the Board of Directors of the Company. For the period from 1 July 2015 to 8 January 2016, the date of acquisition, Central Park is presented on a proportional consolidation basis, with the period it was held as a joint venture then eliminated to reconcile total numbers back the statement of comprehensive income.

 

Unallocated income and expenses are items incurred centrally which are neither directly attributable nor reasonably allocable to individual segments.  Unallocated assets are cash and cash equivalents, and certain other assets.

 

The Group's key measures of underlying performance of a segment are net rental income and the movement in fair value of properties, as these measures illustrate and emphasise that segment's contribution to the reported profits of the Group and the input of that segment to earnings per share.  By focusing on these prime performance measures, other key statistical data such as capital expenditure and once off exceptional items are separately highlighted for analysis and attention.  

 

Information related to each reportable segment is set out below:


Green REIT plc

Notes (continued)

 

2      Operating segments (continued)

 

 

 

Office

Assets

2016

€'000

Retail

Assets

2016

€'000

Industrial

Assets

2016

€'000

Other

Assets (i)

2016

€'000

 

Total

2016

€'000

Joint

Venture**

2016

€'000

Unallocated

Expenses

and Assets

2016

€'000

Group

Consolidated

Position

2016

€'000

Year ended 30 June 2016









Gross rental and related income

54,792

14,145

1,244

1,801

71,982

(5,161)

-

66,821

Property outgoings

(11,403)

(3,155)

(414)

(408)

(15,380)

1,108

-

(14,272)











Net rental and related income

43,389

10,990

830

1,393

56,602

(4,053)

-

52,549

Net movement on fair value of investment properties

95,534

15,476

7,675

1,988

120,673

(11,306)

-

109,367

Profit on Residual Business

-

-

-

-

-

-

519

519

Investment Manager - base fee

(7,783)

(1,615)

(240)

(238)

(9,876)

-

207

(9,669)

Investment Manager - performance fee

-

-

-

-

-

-

(13,893)

(13,893)

Administration expenses

-

-

-

-

-

-

(2,708)

(2,708)











Segment profit before tax

131,140

24,851

8,265

3,143

167,399

(15,359)

(15,875)

136,165

Finance costs

(3,707)

-

-

-

(3,707)

1,313

(2,250)

(4,644)

Share of profit in joint venture

-

-

-

-

-

14,046

-

14,046











Profit before tax

127,433

24,851

8,265

3,143

163,692

-

(18,125)

145,567











As at 30 June 2016


















Total segment assets*

1,030,418

201,312

21,921

20,853

1,274,504

-

57,318

1,331,822











Investment properties and development property

1,014,599

170,751

17,060

38,302

1,240,712

-

-

1,240,712











(i)    Includes hotel and car park assets

*Total cash and cash equivalents and short term deposits at 30 June 2016 is €76.8 million (2015 €37.6 million) of which €55.6 million (2015: €28.2 million) is unallocated to operating segments. 

 

** Reconciliation of the Group's segmental reporting analysis to the consolidated financial statements.  For the purposes of our segmental reporting the Central Park Joint Venture is included on a proportional consolidation basis for the period to 8 January 2016.  The statutory reporting presents the Joint Venture using the equity method



 

Green REIT plc

Notes (continued)

 

2      Operating segments (continued)

 

 

 

Office

Assets

2015

€'000

Retail

Assets

2015

€'000

Industrial

Assets

2015

€'000

Other

Assets (i)

2015

€'000

 

Total

2015

€'000

Joint

Venture**

2015

€'000

Unallocated

Expenses

and Assets

2015

€'000

Group

Consolidated

Position

2015

€'000

Period ended 30 June 2015









Gross rental and related income

40,889

11,258

1,160

1,733

55,040

(9,176)

-

45,864

Property outgoings

(7,043)

(1,893)

(366)

(314)

(9,616)

1,571

-

(8,045)











Net rental and related income

33,846

9,365

794

1,419

45,424

(7,605)

-

37,819

Net movement on fair value of investment properties

102,869

40,219

246

2,905

146,239

(32,436)

-

113,803

Investment Manager - base fee

(4,813)

(1,896)

(198)

(210)

(7,117)

-

(987)

(8,104)

Investment Manager - performance fee

(2,831)

(2,025)

(16)

(128)

(5,000)

-

(15,982)

(20,982)

Administration expenses

-

-

-

-

-

-

(2,137)

(2,137)











Segment profit before tax

129,071

45,663

826

3,986

179,546

(40,041)

(19,106)

120,399

Finance income

-

-

-

-

-

-

95

95

Finance costs

(2,587)

-

-

-

(2,587)

2,587

(1,245)

(1,245)

Share of profit in Joint Venture

-

-

-

-

-

37,454

-

37,454











Profit before tax

126,484

45,663

826

3,986

176,959

-

(20,256)

156,703











As at 30 June 2015









Total segment assets*

746,657

187,243

10,696

39,070

983,666

(76,423)

28,199

935,442











Investment properties and development property

735,507

183,870

10,460

38,469

968,306

(150,980)

-

817,326










 

(i)    Includes hotel and car park assets

*Total cash and cash equivalents and short term deposits at 30 June 2016 is €76.8 million (2015 €37.6 million) of which €55.6 million (2015: €28.2 million) is unallocated to operating segments. 

 

** Reconciliation of the Group's segmental reporting analysis to the consolidated financial statements.  For the purposes of our segmental reporting the Central Park Joint Venture is included on a proportional consolidation basis.  The statutory reporting presents the Joint Venture using the equity method


Green REIT plc

Notes (continued)

 

3

Gross and net rental and related income

2016

2015



€'000

€'000






Gross rental and related income




Gross rental income

47,298

38,920


Spreading of tenant lease incentives/rent free periods

6,241

512


Surrender Premia

2,893

-


Service charge income

10,389

6,432



                  

                  


Gross rental and related income

66,821

45,864





 

Service charge expenses

(10,389)

(6,432)

 

Property operating expenses

(3,883)

(1,613)

 


                  

                  

 




 

Net rental and related income

52,549

37,819



                  

                  

 

 

4

Net movement on fair value of investment properties

2016

2015



€'000

€'000






Fair value gain on investment properties (note 8)

98,601

119,000


Fair value gain on acquisition of interest in The Central Park Limited Partnership (note 10)

12,554

-


Fair value movement on property option (note 16)

(1,788)

(5,197)



                  

                  






Net movement on fair value of investment properties

109,367

113,803



                  

                  

 

 

5

Net finance expense

2016

2015

 

 

€'000

€'000






Finance income




Interest income on short term deposits

-

95



_________

_________


Finance costs




Loan interest

(4,024)

(501)


Commitment fee

(612)

(582)


Bank fees and other costs

(8)

(9)


Overdraft arrangement fee

-

(153)



                  

                  


Finance costs

(4,644)

(1,245)



_________

_________


Net finance expense

(4,644)

(1,150)



                  

                  

 

Green REIT plc

Notes (continued)

 

6      Profit for the period

 

The profit for the period has been arrived at after charging:

 

(i)  Auditor's remuneration

2016

2015


€'000

€'000

Audit fees



Parent and consolidated financial statements

140

105

Audit of subsidiary undertakings

25

25


                  

                  

Total audit fees

165

130




Audit related assurance services

40

40


                  

                  

Total audit and audit related assurance services

205

170


                  

                  




The auditor recharged €Nil in out of pocket expenses



(2015: Nil)



Other fees



Tax compliance

75

22

Tax advisory services

120

145

Other

-

70


                  

                  




Total other fees

195

237


                  

                  







(ii) Directors' remuneration

€'000

€'000




Fees

270

270

Taxes

10

10

Expenses

17

3


                  

                  





297

283


                  

                  

 

 

 

 

Green REIT plc

Notes (continued)

 

7      Taxation

 

 

Tax recognised in profit or loss

2016

2015


€'000

€'000




Current and deferred tax expense

65

-


                  

                  

 

Green REIT plc elected for group REIT status with effect from July 2013.  As a result, the Group does not pay Irish corporation tax on the profits and gains from qualifying rental business in Ireland provided it meets certain conditions.

 

Instead, distributions to shareholders in respect of the property rental business are treated for Irish tax purposes as income in the hands of shareholders. Corporation tax is still payable in the normal way in respect of income and gains from a Group's residual business (generally including any property trading business) not included in the property rental business.  The Group is also liable to pay other taxes such as VAT, stamp duty land tax, stamp duty, local property tax and payroll taxes in the normal way.

 

Within the Irish REIT regime, for corporation tax purposes the property rental business is treated as a separate business to the residual business.  A loss incurred by the property rental business cannot be set off against profits of the residual business.

 

An Irish REIT is required, subject to having sufficient distributable reserves, to distribute to its shareholders (by way of dividend), on or before the filing date for its tax return for the accounting period in question, at least 85% of the Property Income of the Property Rental Business arising in each accounting period.  Failure to meet this requirement will result in a tax charge calculated by reference to the extent of the shortfall in the dividend paid.  A dividend paid by an Irish REIT from its property rental business is referred to as a property income distribution or PID.  Any normal dividend paid from the residual business by the Irish REIT is referred to as a Non-PID dividend.

 

In 2016 the Group earned a profit of €0.52 million from its residual business, resulting in a tax charge of €65,000 for the financial year.

 

The Directors confirm that the Company has remained in compliance with the Irish REIT rules and regulations up to and including the date of this report.

 

 

 

 

 

 

Green REIT plc

Notes (continued)

 

8

Investment properties









2016

2016

2016

2015

2015




Investment Property

Development Property

Total

Investment Property

Development Property

 

Total



€'000

€'000

€'000

€'000

€'000

€'000










At beginning of year

787,571

29,755

817,326

286,005

-

286,005


Additions








-    Central Park Limited Partnership Properties

320,458

11,252

331,710

-

-

-


-    Contract price other

52,231

-

52,231

377,719

23,000

400,719


-    Related acquisition costs

1,502

-

1,502

8,204

1,216

9,420


-    Capital additions

4,809

17,829

22,638

1,764

418

2,182


Reclassification

(500)

500

-

(4,700)

4,700

-


Disposals

(83,296)

-

(83,296)

-

-

-


Change in fair value

87,387

11,214

98,601

118,579

421

119,000



                  

                  

                

                  

                  

                  










Balance at 30 June 

1,170,162

70,550

1,240,712

787,571

29,755

817,326



                  

                  

                

                  

                  

                  

 

 

Acquisitions

 

The initial cost before acquisition expenses of the properties acquired in the year to 30 June 2016 was €372.7 million (2015: €377.7 million) on investment properties and €11.2 million (2015: €23.0 million) on development properties and the total costs of acquisition which comprised of stamp duty payable at an average rate of 2%, legal services and other directly attributable costs arising from the transactions amounted to €1.5 million (2015: €9.4 million), resulting in total capitalised costs of €385.4 million (2015: €410.1 million) on acquisition.

 

Of the total acquisitions during the year €331.7 million was acquired through the acquisition of the Central Park Limited Partnership which is detailed more fully in note 10 Business Combinations.

 

The Group agreed to acquire Albert Quay in Cork in May 2015 subject to practical completion of the building, which was achieved in February 2016. The agreement allowed for stage payments as tenants occupied the buildings. As at 30 June 2016 €41.1 million had been paid with a further €10.35 million in payments expected to be paid post year end.

 

Included in capital additions is interest of €145,000 (2015: €nil) capitalised in respect of assets under development.

 

 

Green REIT plc

Notes (continued)

 

8   Investment properties (continued)

 

Disposal of Investment Properties

 

The Group disposed of four investment properties during Q2 2016 at their then fair value of €72.5 million.

 

In February 2016, the group disposed of its 40% interest in the Mount Street Investment pursuant to the terms of the related option agreement.  The carrying value of the group's 40% interest in the property at that date was €10.7 million.  See note 16 for further detail.

 

During 2016, the Group reclassified a small parcel of land in Horizon Business Park from Investment Property to Development Property.  This was done to reflect the planning permission that had been obtained for a building on the site and the Group's intention to develop the property.

 

       Fair Value of Properties

 

The fair value of the Group's investment property at 30 June 2016 has been arrived at on the basis of valuations carried out at that date by external valuers appointed by the Group, namely CBRE Ireland (CBRE), Savills Ireland (Savills) and Jones Lang LaSalle Ireland (JLL).

 

JLL performed valuations on 50.5% of the investment property portfolio (by value), while CBRE performed valuations on 44.4% of the portfolio and Savills performed valuations on the remaining 5.1%.  The fees earned by JLL, CBRE and Savills from the Group are less than 5% of their total Irish revenues. 

 

The information provided to the valuers, and the assumptions and valuation methodologies and models used by the valuers, are reviewed by senior members of the Investment Manager. The valuers meet with the external auditors and also present the results of their valuation at 31 December and 30 June directly to the Audit Committee. 

 

The valuations performed by CBRE, Savills and JLL, which conform to the Valuation Standards of the Royal Institution of Chartered Surveyors and with IVA 1 of the International Valuations Standards, were arrived at by reference to market evidence of transaction prices for similar properties.

 

For investment property, the income approach/yield methodology involves applying market-derived capitalisation yields to current and market-derived future income streams, with appropriate adjustments for income voids arising from vacancies or rent-free periods.  These capitalisation yields and future income streams are derived from comparable property and leasing transactions and are considered to be the key inputs in the valuation.  Other factors that are taken into account include the tenure of the property, tenancy details, planning, building and environmental factors that might affect the property.

 

In the case of investment property under development, the approach applied is the "residual method" of valuation, which is the investment method as described above with a deduction for the costs necessary to complete the development together with an allowance for the remaining risk.

 

 

 

 

 

 

 

 

 

 

Green REIT plc

Notes (continued)

 

8 Investment properties (continued)

 

 

At 30 June 2016, the Group considers that all of its investment properties fall within Level 3 fair value as defined by IFRS 13 and believe that the income approach / yield methodology using market rental values capitalised with a market capitalisation rate or yield used by the valuers is the best method to determine the fair value of the investment properties.  As further outlined in IFRS 13, a Level 3 fair value recognises that not all of the inputs and considerations made in determining the fair value of property investments can be derived from publicly available data, as the valuation methodology in respect of a property has also to rely on other factors including technical engineering reports, legal data and analysis, and proprietary data bases maintained by the valuers in respect of similar properties to the assets being valued.

 

The Group external valuation experts have noted that "following the EU referendum held on 23 June 2016 concerning the UK's membership of the EU, a decision was taken to exit. We are now in a period of uncertainty in relation to many factors that impact the property investment and letting markets. Since the Referendum date it has not been possible to gauge the effect of this decision by reference to transactions in the market place. The probability of our opinion of value exactly coinciding with the price achieved, were there to be a sale, has reduced".

 

Valuations are performed on a bi-annual basis at each reporting date, being 30 June and 31 December each year. 

 

In consideration of the fair value of investment properties, the current use of the properties is their highest and best use.

 

Green REIT plc

Notes (continued)

 

8   Investment properties (continued)

 

Quantitative information about fair value measurements using unobservable inputs (level 3) at 30 June 2016, per property class are as follows:

 

Asset class

Input

2016 Range

2015 Range



Low

High

Low

High

Retail Assets

Annual rent per sq ft

15.32

81.14

15.12

81.14

ERV per sq ft

11.20

53.60

9.53

48.13

Equivalent yield %

4.16

6.88

4.26

6.76

Long term vacancy rate

0.00%

20.59%

0.00%

16.27%







Office Assets (i)

Annual rent per sq ft

10.62

49.65

11.24

48.93

ERV per sq ft

12.50

54.26

12.00

50.04

Equivalent yield %

4.48

7.76

4.98

7.93

Long term vacancy rate

0.00%

20.55%

0.00%

12.13%







Industrial Assets(ii)

Annual rent per sq ft

6.99

7.81

6.99

7.77

ERV per sq ft

7.48

7.48

6.50

6.50

Equivalent yield %

6.37

6.37

6.66

6.66

Long term vacancy rate

0.00%

0.00%

0.00%

0.00%







Other Assets (iii)

Equivalent yield %

6.50

6.50

6.94

6.94


Long term vacancy rate

0.00%

0.00%

0.00%

0.00%







Development






Assets

Net Initial yield %

5.20%

6.25%

5.20%

5.25%


Build per sq ft

132.94

198.58

160.00

220.00


Rental value per sq ft (iv)

28.00

52.45

50.00

55.00

 

 

(i)    Includes the Central Park office portfolio.

(ii)   There is only one asset in this asset class and therefore there is no range information  provided on ERV, equivalent yield or vacancy rate.

(iii)  Includes hotel and car park assets.

(iv)  Rental value on development assets is the expected rental value that will be achieved upon completion of the development.

 

Green REIT plc

Notes (continued)

 

8   Investment properties (continued)

 

Sensitivity of measurement to variance of significant unobservable inputs

 

A decrease in the estimated annual rent will decrease the fair value.  Similarly, an increase in equivalent yield will decrease the fair value.  There are interrelationships between these rates as they are partially determined by market rate conditions.

 

Across the entire portfolio of investment properties, a 1% increase in equivalent yield would have the impact of a €193.1 million reduction in fair value whilst a 1% decrease in yield would result in a fair value increase of €285.9 million. This is further analysed by property class, as follows:

 

 

2016

2015

 

 

 

Value +1%

Value -1%

Value +1%

Value -1%

 

 

 

Equivalent

Equivalent

Equivalent

Equivalent

 

 

 

Yield

Yield

Yield

Yield

 

 

Property Class

€'000

€'000

€'000

€'000

 

 

 

 

 

 

 

 

 

Office (i)

(164,454)

237,600

(116,884)

172,187

 

 

Retail

(25,511)

44,019

(26,452)

37,814

 

 

Industrial

(2,450)

3,370

(1,451)

1,990

 

 

Other

(680)

920

(2,786)

3,736

 

 


________

________

________

_______

 

 

Investment Properties

(193,095)

285,909

(147,573)

215,727

 

 

Development Properties

(21,990)

31,822

(11,010)

16,407

 

 


________

________

________

_______

 

 

Total Properties

(215,085)

317,731

(158,583)

232,134

 

 


                

              

                

              

 

 

 

 

Green REIT plc

Notes (continued)

 

9   Investment in joint venture

 


2016

2015


€'000

€'000




At the beginning of the period

77,874

41,884

Investments made

3,061

2,344

Distributions received

(630)

(3,808)

Share of profit

14,046

37,454

Disposal of joint venture

(94,351)

-


_______

_______

Total investment

-

77,874


              

              

 

The Group, through its wholly owned subsidiary Green REIT (Central Park) Limited was a 50% partner in the Central Park Limited Partnership, a joint arrangement formed on 28 March 2014 with LVS II CP Investor Ltd. 

 

On the 8 January 2016, the Group purchased the remaining 50% of Central Park from LVS II CP Investor Ltd the details of which are outlined in note 10 to these financial statements.

 

During the period, the Group provided €3.1 million (2015: €2.3 million) further funding to the Partnership and received a distribution of €0.6 million (2015: €3.8 million).  

 

(i)    Summarised income statement


Period from 1 July 2015 to 8 January 2016


 

Underlying

pre-tax

 

Capital and

other

50%

Central Park Joint Venture

100%

Central Park Joint Venture


€'000

€'000

€'000

€'000






Gross rental income

3,632

-

3,632

7,264

Spreading of tenant incentives/ rent free periods

632

-

632

1,264

Service charge income

816

-

816

1,632


_______

_______

_______

______

Gross rental and related income

5,080

-

5,080

10,160


_______

_______

_______

______






Net rental and related income

4,053

-

4,053

8,106

Fair value movement on investment properties

-

11,344

11,344

22,688

Fair value movement on derivatives

-

(38)

(38)

(76)


_______

_______

_______

_______

Operating profit

4,053

11,306

15,359

30,718






Finance expense

(1,313)

-

(1,313)

(2,626)


_______

_______

_______

_______






Profit on ordinary activities before tax

2,740

11,306

14,046

28,092

Income tax

-

-

-

-


_______

_______

_______

_______






Profit for the period after tax

2,740

11,306

14,046

28,092


             

             

              

             

 

 

 

Green REIT plc

Notes (continued)

 

9      Investment in joint venture (continued)

 

 

 

 

 

 

 

 

Financial year ended 30 June 2015


 

Underlying        

pre-tax

 

Capital and         

other         

50%

Central Park Joint Venture

100%

Central Park Joint Venture


€'000

€'000

€'000

€'000






Gross rental income

7,364

-

7,364

14,728

Spreading of tenant incentives/rent free periods

369

-

369

738

Service charge income

1,443

-

1,443

2,886


_______

_______

_______

_______

Gross rental and related income

9,176

-

9,176

18,352


_______

_______

_______

_______






Net rental and related income

7,605

-

7,605

15,210

Fair value movement on investment properties

-

32,555

32,555

65,110

Fair value movement on derivatives

-

(119)

(119)

(238)


_______

_______

_______

_______

Operating profit

7,605

32,436

40,041

80,082






Finance expense

(2,587)

-

(2,587)

(5,174)


_______

_______

_______

_______






Profit on ordinary activities before tax

5,018

32,436

37,454

74,908

Income tax

-

-

-

-


_______

_______

_______

_______

Profit for the period after tax

5,018

32,436

37,454

74,908


                 

                 

                   

               

 

 

 

 

Green REIT plc

Notes (continued)

 

10        Business combinations

 

On 8 January 2016, the Group through its subsidiary Green REIT (Central Park) Ltd completed the purchase of the remaining 50% of the Central Park Limited Partnership, the joint venture it held with LVS II CP Investor Ltd and the remaining 50% of Central Park GP Co Ltd (the General Partner of the Central Park Limited Partnership).

 

The total cash consideration for acquiring the remaining 50% of the joint venture was €81.8 million. A gain of €12.6 million has been included in the net movement on fair value of investment properties in the income statement (note 4), principally representing the fair value uplift in the Central Park investment properties from the contract valuation reference date of 30 June 2015 to the date of acquisition.

 


€'000

€'000

Consideration transferred



Cash consideration

81,797


Fair value of previously held interest

94,351



                  




176,148

Assets acquired and liabilities assumed



Investment property

331,710


Trade and other receivables

4,800


Cash and cash equivalents

4,421


Trade and other payables

(3,353)


Borrowings

(148,876)



                  


Total net assets acquired


188,702



                  

Fair value gain on acquisition


12,554



                  

 

Cost of €0.9 million in respect of stamp duty and legal fees were incurred on the acquisition and have been included in administrative expenses.

 

For the period from 8 January 2016 to 30 June 2016, the Central Park Limited Partnership contributed revenue of €9.6 million and profit, including investment property fair value gains of €10.4 million to the Group's results. If the acquisition had occurred on 1 July 2015, management estimates that the consolidated revenue would have been €77.0 million and the consolidated profit for the year, including investment property fair value gains, would have been €159.5 million.

 

Green REIT plc

Notes (continued)

 

11    Trade and other receivables


2016

2015


€'000

€'000

Current



Tenant lease incentives

11,297

607

Trade receivables

530

562

Other receivables

2,444

1,462


                  

                  




Total trade and other receivables

14,271

2,631


                  

                  

 

The Group's exposure to credit and market risks, and related impairment losses are disclosed in Note 17.  The carrying value of all trade and other receivables approximates to their fair value.

 

12    Share capital and share premium

 

Authorised and issued share capital




2016

2015

Ordinary shares of €0.10 each

Number

Number




Authorised

1,000,000,000

1,000,000,000


                      

                      




Allotted, called up and fully paid



Issued for cash

666,969,696

666,969,696

Issued to settle Performance Fee

13,895,291

-


                      

                      




In issue at 30 June

680,864,987

666,969,696


                      

                      

 

The Company has one class of shares referred to as Ordinary shares. All shares rank equally.  The holders of Ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.        

 

On 28 September 2015, the Company issued 13,895,291 shares at an issue price of €1.51 to the Investment Manager. These shares were issued to meet the Company's obligation with respect to the performance fee, earned in the year ended 30 June 2015.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Green REIT plc

Notes (continued)

 

13    Dividends

 

In accordance with the Irish REIT regime, the Group is required, subject to having sufficient distributable reserves, to distribute to its shareholders (by way of dividend), at least 85% of the Property Income of the Property Rental Business arising in each accounting period.

 

For the year ended 30 June 2016 the Property Income of the Property Rental Business of the Group is calculated as follows:


2016

2016

2015


€'000

€'000

€'000





Profit for the period after taxation


145,502

156,703

Less net movement on fair value of investment properties




-    Group

109,367



-    Central Park joint venture

11,306

(120,673)

(146,358)


              


              


Add back group share of fair value loss on




derivative held in Central Park joint venture


-

119

Less profit on residual business


(519)

-

Add back tax on residual business


65

-



               

               

Property income of the Property Rental




Business


24,375

10,464



               

               

85% thereof


20,719

8,894



               

               

 

 

The directors expect to declare and pay a total dividend of 4.6 cents per share, or a total dividend of €31.4 million in the fourth quarter of 2016.

 

On the 23 October 2015 the Company paid a dividend of €10.7 million (1.6 cent per share) in respect of the year to 30 June 2015.

 

Green REIT plc

Notes (continued)

 

14    Earnings per share

 

Basic and diluted earnings per share

 

Profit attributable to ordinary shareholders


2016

2015


€'000

€'000




Profit for the period, attributable to the owners of the company

145,502

156,703

EPRA adjustment - deduction in fair value movement of



investment properties

(120,673)

(146,358)

EPRA adjustment - add back group share of fair value loss on



derivative held in Central Park joint venture

-

119


___________

___________

EPRA Earnings for year

24,829

10,464


                      

                      

 

Weighted average number of ordinary shares


2016

2015


Number

Number




Shares in issue during the year ended 30 June 2015

-

666,969,696

Effect of shares in issue on 1 July 2015

666,969,696

-

Effect of shares issued on 28 September 2015

10,507,124

-


                      

                      




Weighted average number of ordinary shares - basic

677,476,820

666,969,696


                      

                      




Performance fee shares payable 31 December - dilutive effect

1,979,455

1,655,629

Performance fee shares payable 30 June  - dilutive effect

-

-


                      

                      




Weighted average number of ordinary shares - diluted

679,456,275

668,625,325


                      

                      




Basic earnings per share (cents)

21.5

23.5

Diluted earnings per share (cents)

21.4

23.4

EPRA earnings per share (cents)

3.7

1.6


                      

                      

 

The performance fee shares payable in respect of the year to 30 June 2016 are calculated based on a share price €1.465 which reflects the average share price calculation in the IMA.  For the purposes of the diluted earnings calculation in 2016 €5.8 million of the performance fee shares are deemed as issued on the 31 December 2015 (in line with interim accounts accruals) (2015: €5.0 million) and therefore is included in weighted average shares calculation for half the year.  The remaining performance fee shares are deemed as issued as at the year end.  

 

Green REIT plc

Notes (continued)

 

15    Net asset value per share


2016

2015







Net assets as at 30 June ('000)

€1,048,041

€899,317

EPRA Adjustment - Remove Group share of derivative held as part of Central Park joint venture ('000)

-

(€56)


___________

___________

EPRA Net Assets as at 30 June ('000)

€1,048,041

€899,261


                      

                      




Ordinary shares in issue at 30 June

680,864,987

666,969,696

Performance fee shares issuable

9,482,718

13,895,291


___________

___________

Ordinary shares including Performance Fee shares issuable

690,347,705

680,864,987


                      

                      




Basic NAV per share (cents)

Diluted NAV per share (cents)

153.9

151.8

134.8

132.1

EPRA NAV per share (cents)

151.8

132.1


                      

                      

 

The European Public Real Estate Association (EPRA) issued Best Practices Recommendations most recently in August 2011 and additional guidance in December 2014, which gives guidelines for performance measures.

 

The EPRA NAV per share excludes the net mark to market adjustment to the value of financial instruments which are used for hedging purposes and where the Company has the intention of keeping the hedge position until the end of the contractual duration and this EPRA NAV per share is calculated on a fully diluted basis.  The dilutive effect of the Investment Manager performance fee at 30 June 2016 represents the number of shares that are issuable.

 

Green REIT plc

Notes (continued)

 

16

Trade and other payables


2016

2015




€'000

€'000







Accrued expenditure


6,947

2,876


Deferred income and income received in advance


6,369

3,191


Option liability


-

7,890


Deferred consideration


10,350

-


Other creditors


4,554

497




______

______


Total trade and other payables


28,220

14,454




            

            

 

In May 2015, the Group through its subsidiary Green REIT (ROI) Ltd agreed to purchase Albert Quay in Cork. The Deferred Consideration represents the estimated final liability in relation to the purchase of Albert Quay which is expected to be payable no later than March 2017.

 

In connection with the purchase of the Mount Street Investment Property, the group granted the original vendor an option to acquire a 40% interest in the property.  On 8 February 2016, the vendor exercised this option at an exercise price of €1 million cash consideration. The fair value of the option liability at the date of exercise was a liability of €9.7 million (note 4).

 

The carrying value of all other trade and other payables is approximate to their fair value.

 

Green REIT plc

Notes (continued)

 

17    Financial instruments - risk management and fair value

 

Financial risk management

 

Overview

 

The Group has exposure to the following risks arising from financial instruments:

 

·    credit risk

·    liquidity risk

·    market risk

 

This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital.

 

Risk management framework

 

The Company's Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework.

 

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.  Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. 

 

The Group Audit Committee keeps under review the adequacy and effectiveness of the Group's internal financial controls and the internal control and risk management systems.

 

Fair value

 

No differences arose between the determined fair values of the financial assets and liabilities of the Group and their carrying amounts.

 

 

Credit risk

 

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's trade and other receivables, cash and cash equivalents and short-term investments. The carrying amount of financial assets represents the maximum credit exposure.

 

Green REIT plc

Notes (continued)

 

17    Financial instruments - risk management and fair value (continued)

 

Credit risk (continued)

 

Exposure to credit risk

 

Carrying amount

2016

2015


€'000

€'000




Trade and other receivables

2,974

2,631

Cash and cash equivalents

76,839

37,611


________

________


79,813

40,242


                

                

 

Trade and other receivables

 

The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer.  The Group is not exposed to any concentration of revenue with any one customer.

 

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, industry, aging profile, maturity and existence of previous financial difficulties. 

 

Trade and other receivables relate mainly to the Group's property tenants.  The day to day management of the Group's customers is managed by appointed property agents.

 

All receivables were deemed current at 30 June 2016 and no impairment allowance was considered necessary.

 

Cash and cash equivalents are held with Bank of Ireland.

Green REIT plc

Notes (continued)

 

17    Financial instruments - risk management and fair value (continued)

 

Liquidity risk

 

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

 

The Group monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables and capital commitments.  All trade and other payables at 30 June 2016 are considered current with the expected cash outflow equivalent to their carrying value.

 

Detailed below are the contractual maturities of the Group's financial liabilities: 

 

Group

Carrying

Contractual

6 - 12

1 - 2

2 - 5


amount

cash flows

months

years

years


€'000

€'000

€'000

€'000

€'000







At 30 June 2016






Non derivatives






Borrowings

252,948

271,940

2,554

5,108

261,724

Accrued expenditure

6,947

6,947

-

-

-

Deferred Consideration

10,350

10,350

10,350

-

-

Investment manager base fee

2,613

2,613

-

-

-

Other Creditors

4,554

4,554

-

-

-


 _____

______

______

_____          

_____          

Total

277,412

296,404

12,904

5,108

261,724


 _____

______

______

_____          

_____          

 

Group

Carrying

Contractual

6 - 12

1 - 2

2 - 5


amount

cash flows

months

years

years


€'000

€'000

€'000

€'000

€'000







At 30 June 2015






Non derivatives






Borrowings

19,423

22,271

218

436

21,399

Accruals

2,822

2,822

-

-

-

Service charge payables

234

234

-

-

-

Investment manager base fee

2,248

2,248

-

-

-


 _____

______

______

_____          

_____          

Total

24,727

27,575

218

436

21,399


 _____

______

______

_____          

_____          

 

Green REIT plc

Notes (continued)

 

17    Financial instruments - risk management and fair value (continued)

 

Market risk

 

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments.  The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

 

       Interest Rate Risk

 

At 30 June 2016 the Group had a revolving credit facility ("RCF") with Barclays bank that had a principal drawn balance of €105.4 million and an overall interest rate of Euribor + 2.0%, and a loan of €150.0 million with Bank of Ireland that had an interest rate of Euribor + 2.0%.  The Group's interest on the RCF was €1.3 million on an Effective Interest Rate basis for the period and the Group's share of the interest expense on the Bank of Ireland loan was €1.3 million for the period held as a joint venture and €2.1 million for the period when the loan was held solely by the Group.

 

An increase or decrease in the interest rate by 10 basis points will result in an increase/decrease of interest payable of €0.3 million on debt of €255 million, on an annualised basis.

 

The Group is also exposed to interest rate risk on its cash and cash equivalents. These balances attract low interest rates and therefore a relative increase or decrease in their interest rates would not have a material effect on profit or loss.

 

Post 30 June 2016, additional hedging was put in place in the form of forward starting interest rate swaps covering the period from October 2018 to October 2022, at a blended fixed rate of 0.074% per annum on a notional amount of €200 million.

 

       Currency risk

 

The Group is not exposed to currency risk.  The Company operates only in the Republic of Ireland. 

 

Capital management

 

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.  At 30 June 2016, capital consists entirely of equity.  The Board monitors the return on capital as well as the level of dividends to ordinary shareholders.  Subject to distributable reserves, it is the policy of the Company to distribute at least 85% of the Property Income of its Property Rental business for each accounting period.

 

 

Green REIT plc

Notes (continued)

 

18    Borrowings


30 June

30 June


2016

2015


€'000

€'000




Revolving credit facility

104,476

19,423

Bank of Ireland Central Park facility

148,472

-


________

________

Total Borrowings

252,948

19,423


                

                

 

During the previous year the Company entered into a revolving credit facility with Barclays for an initial commitment of €150 million at an interest rate of Euribor + 2.0%. There were a number of drawdowns during the year and excess proceeds from the sale of certain investment properties were used to partially pay down the loan prior to the year end.  The amount presented in the financial statements is net of initial arrangement fees and associated costs of €1.6 million.  The facility is repayable by December 2018 and is secured by way of a floating charge over the assets of the Company and its subsidiaries, excluding those assets secured to Bank of Ireland under the Central Park financing.  

 

On 8 January 2016, the Group through its subsidiary Green REIT Central Park took full control of the Central Park Limited Partnership (See Note 10) and assumed full liability for the €150.0 million Bank of Ireland loan that had been used by the joint venture as part of the initial acquisition of the property in 2014. On acquisition, the facility had an interest rate of Euribor + 3.0%. The terms of the facility were renegotiated in May 2016 and the margin of interest was reduced to Euribor + 2.0% with the term being elongated from June 2018 to June 2021. The loan is secured on the assets owned by the Group at Central Park, Sandyford, Co. Dublin along with the relevant rents from those properties.

 

19    Related parties

 

(a)  Subsidiaries

 

The Company's subsidiaries are detailed in Note 20.

 

The Company transacts with its 100% owned and controlled subsidiaries and has provided them with the necessary funding to facilitate the acquisition of the assets that now form part of the Group's overall assets. 

 

The Company has provided its subsidiaries with €808.6 million (2015: €704.0 million) in cash to fund their activities.

 

(b) Investment Manager - Green Property REIT Ventures Limited

 

The Company, pursuant to the Investment Manager Agreement entered into on 12 July 2013, is managed by Green Property REIT Ventures Limited.  Through the Investment Manager, the Company will have access to the asset management operation of Green Property Management Limited.

 

 

 

 

Green REIT plc

Notes (continued)

 

19    Related parties (continued)

 

(b) Investment Manager - Green Property REIT Ventures Limited (continued)

 

Investment Manager role and responsibilities

The Investment Manager identifies possible property acquisitions for, and opportunities with a view to investment by, the Company by reference to the Company's investment policy and strategy and will be entitled to consult with professional advisors to assist it.

 

The Investment Manager has discretionary authority to enter into transactions for and on behalf of the Company subject to certain reserved matters which require the consent of the board of directors of the Company.  Such reserved matters include the acquisition or disposal of property investment where the aggregate acquisition cost/gross proceeds in respect of such property investment is/are in excess of €30 million (in the case of income producing property) or €15 million (in the case of property not producing income at the time of acquisition) and entry into leases where the rent referable to the relevant lease is greater than 7.5% of the aggregate rental income of the Company.

 

The Board has specified certain reserved matters which require the consent of the Board of the Company and should be approved at a board meeting attended by an appropriate number of directors, a majority of whom must be independent of the Investment Manager.

 

The Investment Manager Agreement has an initial term of five years and thereafter shall continue for consecutive three year periods, unless terminated by either party.

 

Base fee

The base fee is paid to the Investment Manager in cash quarterly in arrears.  The base fee in respect of each quarter is calculated by reference to 1% per annum of the EPRA NAV for that quarter.

 

The total base fee earned by the Investment Manager in the period amounted to €9.7 million (2015: €8.1 million) (excluding VAT).  The Company paid Green Property REIT Ventures €9.4 million (2015: €7.7 million) during the period and owed Green Property REIT Ventures €2.6 million (2015: €2.3 million) in respect to the base fee.

 

Performance fee

The performance fee is designed to incentivise and reward the Investment Manager for generating returns to shareholders.

 

The return to shareholders in an annual accounting period is the increase in the EPRA NAV plus the total dividends that are declared in the accounting period (adjusted to exclude the effects of any issuance of ordinary shares during that accounting period) ("Shareholder Return").  The performance fee is calculated annually based on 20% of the lesser of out-performance above two key hurdles, as follows (both hurdles have to be achieved for the performance fee to become payable):

 

(a)   the excess of Shareholder Return over a 10% annual return hurdle.  The annual return hurdle resets annually to 10% of the sum of the previous Accounting Period's closing EPRA NAV; and

 

 

 

 

 

Green REIT plc

Notes (continued)

 

19    Related parties (continued)

 

(b) Investment Manager - Green Property REIT Ventures Limited (continued)

 

(b)   the excess of the year-end EPRA NAV (which is adjusted to include total dividends declared in the Accounting Period and adjusted to exclude the effects of any issuance of Ordinary Shares during that Accounting Period) over the relevant high watermark. 

 

The relevant high watermark in each Accounting Period is the closing EPRA NAV (adjusted for total dividends declared during that Accounting Period and adjusted to exclude the effects of any issuance of Ordinary Shares during that Accounting Period) achieved in the most recent Accounting Period in which a performance fee was payable or, if greater, the gross proceeds of the Initial Issue plus further cash and non-cash issues of Ordinary Shares (excluding any issues of performance fee shares but including the capital raise), as at the end of the Accounting Period in respect of which the performance fee is calculated.

 

The performance fee is calculated annually based on the number of Ordinary Shares in issue at the year-end (but excluding, for that Accounting Period only, any Ordinary Shares issued during that Accounting Period).

 

The performance fee is accounted for as a share based payment arrangement, as described in the accounting policies.  It is accounted for as a charge against income but as it is settled in shares will have no impact on the net assets of the Group.

 

The performance fee payable to the Investment Manager for the year ended 30 June 2016 is €13.9 million (2015: €20.9 million).  The fee will be settled by way of an issue of 9,482,718 number of Ordinary Shares to the Investment Manager based on the average share price of €1.465 for the 20 business days following the end of the accounting period.

 

The Ordinary Shares issued pursuant to performance fee arrangement are subject to a lock up period as follows:

(a)  One third shall be subject to a lockup period of 18 months from date of issue

(b)  One third shall be subject to a lock up period of 30 months from date of issue, and

(c)  One third shall be subject to a lock up period of 42 months from date of issue.

 

The provisions permitting releases from the lock up arrangements will be suspended if EPRA NAV falls below the gross proceeds on the issue of ordinary shares, of €710 million.

 

Green Property REIT Ventures holds 13,895,291 Ordinary shares in the Company. These shares were issued on the 28 September 2015 in full settlement of the performance fee for the year to 30 June 2015.

 

Green REIT plc

Notes (continued)

 

19    Related parties (continued)

 

 (c)  Green Property Holdings Limited

 

Green Property Holdings Limited ("GP Holdings") is a related party by virtue of it being a shareholder in Green REIT plc.  At 30 June 2016, GP Holdings Ltd held 10,000,000 Ordinary shares of the Company.  GP Holdings also shares common directors with Green REIT Plc.

 

(d)   Green Property Management Ltd (Subsidiary of GP Holdings Ltd)

 

Green Property Management Ltd ("GPM") is a related party by virtue of common directors with Green REIT plc. GPM operates central payroll services for the Irish directors of Green REIT plc. During the period to 30 June 2016, GPM processed Directors fees of €0.3 million on behalf of the Company.  GPM did not charge any fees or apply any commission for this service.

 

(e)   Directors and key management personnel

 

During the year to 30 June 2016, the Company incurred directors' fees, including taxes and expenses of €0.3 million (2015: €0.3 million).  There is no other director or key management compensation paid by the Company.  

 

 

Green REIT plc

Notes (continued)

 

20    Group entities

 

The Company's principal subsidiaries as at 30 June 2016 are set out below.  All of the Company's subsidiaries are resident in Ireland, with their registered address at Styne House, Upper Hatch Street Dublin 2.  All group entities trade and operate in Ireland only.

 

Group company

Company's direct holding

Nature of business

Properties held

Green REIT (ROI) Ltd

100%

Property Investment

INM Building

Albert Quay

Fitzwilliam Hall

Parkway Retail Park

1-2 College Green

4-5 College Green

76-78 Harcourt Street

Green REIT (BR) Ltd

100%

Property Investment

2 Burlington Road

Green REIT Mount Street Ltd

100%

Property Investment

84-93 Lower Mount Street

Green REIT Horizon Ltd

100%

Property Investment

Horizon Logistic Park and Lands

Green REIT Arena Ltd

100%

Property Investment

The Arena Centre

Green REIT (Molesworth Street) Ltd

100%

Property Investment

30-33 Molesworth Street

Green REIT (Central Park) Ltd

100%

Property Investment

100% investment in structure that holds commercial properties at Central Park, Sandyford.

Green REIT (HR) Ltd

100%

Property Investment

4-5 Harcourt Road

Green REIT (George's Quay and Court) Ltd

100%

Property Investment

Block A, E and F George's Quay and George's Court

Green REIT (Westend) Ltd

100%

Property Investment

Westend Retail Park, Office Park and Commercial Village

Green REIT (Dawson St) Ltd

100%

Property

13-17 Dawson Street

 

In addition, some of the Group companies acquired service charge management companies or interests in service charge entities when they acquired the properties they now hold. These interests are not considered material to the Group's operations.

 

The Company has guaranteed the liabilities of its subsidiary undertakings for the purpose of Section 357 of the Companies Act 2014, and as a result such subsidiaries have been exempted from the filing provisions of Sections 347 and 348 of the Companies Act 2014.

 

Green REIT plc

Notes (continued)

 

21    Operating lease arrangements

 

The Group earns rental income by leasing its investment properties to tenants under non-cancellable operating leases.  At the reporting date, the Group had contracted with tenants to receive the following future minimum lease payments:

 


2016

2015

 


€'000

€'000

 




 

Not later than a year

59,249

50,712

 

Later than one year but not more than five years

200,785

121,755

 

More than five years

221,698

111,427

 

 


                

              


481,732

283,894

 

 


              

              

 

22    Subsequent events

 

There were no events subsequent to the year-end that require adjustment to or disclosure in the financial statements.

 

23    Capital commitments

 

The Group has entered into a number of development contracts to develop buildings at various locations. The total capital commitment over the next 12-24 months with respect to these developments is expected to be in the order of €99 million.

 

24    Contingent liabilities

 

The Group is not aware of any contingent liabilities that should be disclosed in these financial statements.

 

Green REIT plc

Notes (continued)

 

25    EPRA Performance Measures

 

 

Number of Shares

Earnings per share

Net asset value


2016

2015

2016

2015


Number

Number

Number

Number






For use in basic measures

677,476,820

666,969,696

680,864,987

666,969,696


                      

                      

                      

                      






Performance shares - dilutive effect

1,979,455

1,655,629

9,482,718

13,895,291


                      

                      

                      

                      






For use in diluted measures

679,456,275

668,625,325

690,347,702

680,864,987


                      

                      

                      

                      






 


2016

2015


€'000

€'000




Profit for the period, attributable to the owners of the company

145,502

156,703

EPRA adjustment - deduction in fair value movement of



investment properties

(120,673)

(146,358)

EPRA adjustment - add back group share of fair value loss on



derivative held in Central Park joint venture

-

119


___________

___________

EPRA Earnings for year

24,829

10,464


                      

                      

Basic earnings per share (cents)

21.5

23.5

 

Diluted earnings per share (cents)

21.4

23.4

 

EPRA earnings per share (cents)

3.7

1.6

 


                      

                      

 




 


2016

2015







Net assets as at 30 June ('000)

€1,048,041

€899,317

EPRA Adjustment - Remove Group share of derivative held as part of Central Park joint venture ('000)

-

(€56)


___________

___________

EPRA Net Assets as at 30 June ('000)

€1,048,041

€899,261


                      

                      

Basic NAV per share (cents)

Diluted NAV per share (cents)

153.9

151.8

134.8

132.1

EPRA NAV per share (cents)

151.8

132.1


                      

                      




 

 

Green REIT plc

Notes (continued)

 

25    EPRA Performance Measures (continued)

 

Cost Ratios


2016

2015


€'000s

€'000s




Administrative costs

2,708

2,137

Property Operating costs

3,883

1,613

Share of Joint Venture costs

211

315


                      

                      

Total Costs

6,802

4,065


                      

                      




Revenue - Group

56,432

39,432

Share of Joint Venture revenue

4,418

7,733


                      

                      


60,850

47,165


                      

                      




Cost Ratio

11.2%

8.6%


                      

                      




 

Gearing and interest cover

 

Facility

Balance at 30 June

Interest Cost

Annual Interest

Security Value

Gearing - Property Only

Passing Rent

Interest Cover

 

€000

%

€000

€000

%

€000

Times

Bank of Ireland

150,000

2.00%

3,000

345,740

43.4%

15,500

5.2

Barclays

105,400

1.72%

1,813

895,252

11.8%

30,400

16.8

 

               

               

               

               

               

               

               

Total

255,400

1.88%

4,813

1,240,992

20.6%

45,900

9.5

 

               

               

               

               

               

               

               

 

 

Total Return

 

 

€000

 

 

Net Assets at 30 June 2016

1,048,041

 

 

Add: Dividends Paid in October 2015

10,672

 

 

 

               

 

 

Adjusted Net Assets

1,058,713

 

 

 

 

 

 

Net Assets at 30 June 2015

899,317

 

 

 

               

 

 

Increase in Adjusted Net Assets

159,396

 

 

 

               

 

 

Total Return

17.7%

 

 

 

              

 

 

 

 

COMPANY INFORMATION

 

 

 

Directors                                                         Gary Kennedy (Chairman)

(all non executives)                                            Pat Gunne

                                                                        Jerome Kennedy

                                                                        Gary McGann

                                                                        Stephen Vernon (British)

                                                                        Thom Wernink (Dutch)

 

 

Secretary                                                         Mark Munro

 

 

Registered office                                            Styne House

                                                                        Hatch Street Upper

                                                                        Dublin 2

 

 

Investment Manager                                      Green Property REIT Ventures Ltd.,

                                                                        Styne House

                                                                        Hatch Street Upper

                                                                        Dublin 2           

 

 

Auditors                                                          KPMG

                                                                        Chartered Accountants

                                                                        1 Stokes Place

                                                                        St. Stephen's Green

                                                                        Dublin 2

 

 

Solicitors                                                         Arthur Cox

                                                                        Earlsfort Centre

Earlsfort Terrace

                                                                        Dublin 2

 

 

Principal Bankers                                           Bank of Ireland

                                                                        39 St. Stephen's Green

                                                                        Dublin 2

 

 

Valuers                                                            CBRE

                                                                        Connaught House

                                                                        1 Burlington Road

                                                                        Dublin 2

 

                                                                        Jones Lang LaSalle Ltd.,

                                                                        Styne House

                                                                        Hatch Street Upper

                                                                        Dublin 2

 

                                                                        Savills

                                                                        11 South Mall

                                                                        Cork                

 

 

GLOSSARY OF TERMS

 

The following explanations are not intended as technical definitions, but rather are intended to assist the reader in understanding terms used in this report.

 

"AIFMD"

Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers.

 

"AIFM"

an alternative investment fund manager within the meaning of AIFMD.

 

"Average Passing Rent"

passing rent divided by occupied net internal area

 

"Basic NAV per Share"

IFRS net assets divided by the number of shares in issue at the balance sheet date

 

"CBD"

Central Business District

 

"economic cycle"

the upward and downward movements of levels of gross domestic product and refers to the period of expansions and contractions in the level of economic activities around a long-term trend

 

"equivalent yield"

The internal rate of return from an investment property reflecting reversions to current market rent and such items as voids and non-recoverable expenditure but ignoring future changes in capital value.

 

"EPRA"

European Public Real Estate Association.

 

"Earnings per share (EPS)"

Profit after taxation attributable to owners of the Parent divided by the weighted average number of ordinary shares in issue during the period.

 

"EPRA NAV per Share"

EPRA net assets divided by the number of shares at the balance sheet date on a diluted basis (see Appendix 1 for further details)

 

"ERV"

Estimated rental value (ERV) is the open market rent that a property can be reasonably expected to attain given its characteristics, condition, location and local market conditions.

 

"FRI Lease"

Full Repair and Insurance Lease

 

"GDP" or "Gross Domestic Product"

the market value of all officially recognised final goods and services produced within a country in a given period of time

 

"gearing"

calculated as the borrowings secured on an individual asset as a percentage of the market value of that asset, or the aggregate borrowings of a company as a percentage of the market value of the total assets of the company (also referred to as loan to value or LTV ratio). In an investment strategy context, gearing refers to the use of various financial instruments or borrowed capital to increase the potential return of an investment

 

"GNP" or "Gross National Profit"

is the sum of GDP and Net Factor Income from the rest of the world

 

"good quality secondary assets"

a real estate asset that would be considered secondary to a prime asset due to, amongst other things, its location or quality of construction. An example of a good quality secondary real estate asset would be a retail unit close to but not location on a high street

 

"IMA"

the Investment Manager Agreement entered into by the Company and the Investment Manager (Green Property REIT Ventures Limited) on 12 July 2013

 

"industrial and logistics"

an industrial type real estate asset which may, for example, be used for manufacturing and distribution operations

 

"investment income yield"

The current annualised rent produced by investment properties, net of costs, expressed as a percentage of capital value, after allowing for notional purchaser's costs

 

"investment running yield"

The annualised contracted rent produced by investment properties expressed as a percentage of capital value, after allowing for notional purchaser's costs

 

"Irish REIT Regime"

Part 25A Taxes Consolidation Act 1997 (as inserted by section 41 of the Finance Act 2013)

 

"JV"

Joint venture arrangement

 

"LTV"

Loan to Value, calculated as the borrowings secured on an individual asset as a percentage of the market value of that asset.

 

"m2"

square meters

 

"mixed use"

a building or complex of buildings that blends a combination of residential, commercial, cultural, institutional, or industrial uses, where those functions are physically and functionally integrated

 

"multifamily"

a classification of housing where multiple separate housing units for residential inhabitants are contained within one building or several buildings within one complex

 

''Net Asset Value'' or ''NAV''           

The measure shown in a company's balance sheet of all assets less all liabilities, and is equal to the equity attributable to shareholders in any company or group.

 

The net asset value of the Company will be measured consistently with IFRS as adopted in the EU, and in particular will include the Company's property assets at their most recent independently assessed market values and also the Company's debt and hedging instruments at their most recent independent valuations.

 

"Net Internal Area"

 the usable area within a building measured to the internal face of the perimeter walls at each floor level

 

 

 "occupier market"

the office, industrial and retail market

 

"Over-rented"

Space where the passing rent is above the ERV

 

"passing rent"

the annualised cash rental income being received as at a certain date, excluding the net effects of straight-lining for lease incentives;

 

"prime assets"

a highly regarded real estate asset due to, amongst other things, its location or quality of construction. An example of prime real estate asset would be a modern office building in the central business district of a major city

"Property Income"

in relation to a company or group, means the Property Profits of the company or group, as the case may be, calculated using accounting principles, as reduced by revaluation surpluses on the Company's assets or increased by the revaluation deficits on the Company's assets.

"Property Income Distribution" or "PID"

a dividend paid by a REIT or the principal company of a Group REIT, as the case may be, from its Property Income;

"reversionary"

the gap by which the passing rent of a property or portfolio is below that of its ERV.

 

"sq ft"

square feet

 

"sq m"

square metres

 

"Total Return"

the movement in EPRA net asset value between the beginning and the end of each financial year plus the dividend paid during the year, expressed as a percentage of the EPRA net asset value at the beginning of the financial year.

 

"yield"

A measure of return on an asset calculated as the income arising on an asset expressed as a percentage of the total cost of the asset, including costs

 

"WAULT"

the weighted average period of unexpired lease term or if earlier period to the next lease break.

 

 

Forward Looking Statements

 

This preliminary announcement may contain certain forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this announcement. The Company will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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