Hibernia REIT plc Company update July / August 2014
DISCLAIMER This presentation (hereinafter "this document") has been prepared by Hibernia REIT plc (the "Company") and WK Nowlan REIT Management Limited ("WNRML"), the Company s investment manager, for information purposes only. This document has been prepared in good faith but the information contained in it has not been independently verified and does not purport to be comprehensive. The Company is not undertaking any obligation to provide any additional information or to update this document or to correct any inaccuracies that become apparent. This document is neither a prospectus nor an offer nor an invitation to apply for securities. The information contained in this document is subject to material updating, completion, revision, amendment and verification. This document does not constitute or form a part of any offer for sale or solicitation of any offer to buy or subscribe foranysecurities.anyprospective investor must make its own investigation and assessments and consult with its own adviser concerning any evaluation of the Company and its prospects. No representation or warranty, express or implied, is given by or on behalf of the Company, its group companies, WNRML or any of their respective shareholders, directors, officers, employees, advisers, agents or any other persons as to the accuracy, completeness, fairness or sufficiency of the information, projections, forecasts or opinions contained in this presentation. In particular, the market data in this document has been sourced from third parties. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in any of the information or opinions in this document. Certain information contained herein constitutes "forward-looking statements", which can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or actual performance of the Company may differ materially from those reflected or contemplated in such forwardlooking statements. No representation or warranty is made as to the achievement or reasonableness of, and no reliance should be placed on, such forward-looking statements. There is no guarantee that the Company will generate a particular rate of return. The Company has not been, and will not be, registered under the US Investment Company Act of 1940, as amended, and investors are not entitled to the benefit of that Act. This Presentation is available only to persons who are (1) both Qualified Institutional Buyers as defined in Rule 144A under the US Securities Act of 1933, as amended, as well as Qualified Purchasers within the meaning of section 2(a)(51) of the US Investment Company Act of 1940, as amended, or (2) outside the United States and not US persons as defined in Regulation S under the US Securities Act of 1933, as amended. 2
Agenda Operating and financial highlights Market update Acquisitions Conclusion and outlook 3
OPERATING AND FINANCIAL HIGHLIGHTS Overview Highly active period since full year results to 31 March 2014 Completed eight acquisitions, totalling 267m, primarily of Dublin CBD offices Three new hires including CFO, bringing management team to 12 Support from the wider WKN team of 33 people Portfolio taking shape Have invested 336m, over 90% of net proceeds raised in December 2013, with a further 63m committed Summary of portfolio statistics 76% (by cost) in Dublin CBD offices, remainder between residential and logistics, all within Dublin Portfolio NIY 4.1% (4.7% post rent free periods / abatements) Strong reversionary potential: weighted average contracted rents for offices of 33 per sq. ft. Development project at Wyckham Point and development opportunities at Windmill Lane and Gateway sites Outlook Very high level of transaction volumes in Dublin office market currently and NAMA to accelerate portfolio sell-down Management are finding attractive acquisition opportunities within the Dublin office market, particularly in off-market and loan spaces Hibernia is considering various funding options: in first instance seeking to put in place debt 4
OPERATING AND FINANCIAL HIGHLIGHTS Our strategy has not changed since our IPO Investment criteria Balanced portfolio of property types Principally institutional quality, well located, income producing commercial property Up to 30% of portfolio allocated to value-added properties e.g. requiring refurbishment or tenanting Full scale development not envisaged other than in special circumstances of limited risk and not above 15% of portfolio Primarily Dublin CBD and Greater Dublin area Target property types and locations Majority in Grade A or Grade B office buildings that can be acquired close to or below replacement cost Appropriate allocation to Retail assets with low tenant risk e.g. in Dublin s prime shopping districts that have historically performed well Industrial assets in prime locations close to good transport and leased to strong tenant covenants Prime Dublin residential, infill residential schemes in close proximity to public transportation and within 6 miles of CBD Illustrative targeted portfolio breakdown Lot sizes typically 10m 50m Targeting Total Shareholder Return of 10-15% p.a. (pre-taxation) with a substantial income element when fully invested Ability to enter joint ventures Gearing not to exceed 50% of portfolio (Irish REIT limit) and not expected to exceed 40% of portfolio at time of borrowing Office Retail Industrial Residential 5
OPERATING AND FINANCIAL HIGHLIGHTS Summary of acquisitions to date Since commencing operations in January 2014, have deployed 336m (over 90% of net IPO proceeds) and have a further 63m committed Acquisitions to date Name Location Acquisition completion date Initial investment Type Net initial yield Acquisition type Acquisition structure Dorville Portfolio (key asset: Wyckham Point) Dundrum, Dublin 16 28 Feb 14 67m Primarily Residential n/a Off market Loan New Century House Mayor Street, Dublin 1 01 May 14 47m Office c.6% (1) Off market Property Gateway Site Newlands Cross, Dublin 22 07 May 14 10.1m Industrial c.5% (2) On market Property Montague House and Hardwicke House Hatch Street Upper and Adelaide Road, Dublin 2 16 May 14 18.3m (3) Office c.8% Off market Loan Chancery Building and Chancery Apartments Chancery Lane, Dublin 8 30 Jun 14 16m Office c.7% Off market Loan Notes (1) Once rent abatement period ends in September 2015 (2) Gross initial yield (3) Hibernia REIT has the right to take full ownership for an incremental 41.75m 6
OPERATING AND FINANCIAL HIGHLIGHTS Summary of acquisitions to date (cont d) Acquisitions to date Name Location Acquisition completion date Initial investment Type Net initial yield Acquisition type Acquisition structure Hanover Building Hanover Quay, Dublin 2 16 Jun 14 20.2m Office c.7% Off market Loan Windmill Lane Windmill Lane, Dublin 2 13 Jun 14 7.5m Development site n/a Off market Property Observatory Sir John Rogerson s Quay, Dublin 2 16 Jul 14 51.5m Office c.4% (1) On market Property Guild House and Commerzbank House Guild Street, Dublin 1 18 Jul 14 90.8m Office c.7% Off market Property Total Total including acquisition costs 328m 336m Since commencing operations in January 2014, have deployed 336m (over 90% of net IPO proceeds) and have a further 63m committed Notes (1) Once rent free periods end in 2015 and 2016 7
Agenda Operating and financial highlights Market update Acquisitions Conclusion and outlook 8
MARKET UPDATE Irish economic backdrop supportive of continued recovery in property market Domestic demand to contribute to growth in 2014 10% 8% 6% 4% 2% % YoY 0% -2% -4% -6% -8% -10% -12% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f 2015f Domestic demand GDP Source: CSO, Goodbody PMIs are well into positive territory 65 Employment growth has picked up 2% 1% 0% -1% -2% -3% Source: CSO Consumer confidence has risen since the end of the bailout 100 Data released since IPO -4% -10% Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Quarterly (LHS) Annual (RHS) 6% 4% 2% 0% -2% -4% -6% -8% 60 90 80 55 50 45 Data released since IPO Index 70 60 50 40 Data released since IPO 40 May 11 Jul 11 Sep 11 Nov 11 Jan 12 Mar 12 May 12 Jul 12 Sep 12 Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14 30 Jan 08 May 08 Sep 08 Jan 09 May 09 Sep 09 Jan 10 May 10 Sep 10 Jan 11 May 11 Sep 11 Jan 12 May 12 Sep 12 Jan 13 May 13 Sep 13 Jan 14 May 14 Services Manufacturing Composite Source: Bloomberg, Markit Source: Factset 9
MARKET UPDATE Commercial property market recovering strongly, particularly office sector Commercial property is continuing its recovery 1,600 1,400 Capital values are currently at c.1999 levels 600 580 Capital value index 1,200 1,000 800 600 400 200 0 1977 1981 1984 1986 1988 1990 1992 1994 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Capital value index 560 540 520 500 480 460 440 420 Data released since IPO Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Source: Jones Lang LaSalle Source: Jones Lang LaSalle Quarterly change in capital values by sector Quarterly change in rents by sector 7% 6% 5% 4% Data released since IPO 8% 6% 4% Data released since IPO Quarterly change 3% 2% 1% 0% -1% -2% -3% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Retail Office Industrial Quarterly change 2% 0% -2% -4% -6% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Retail Office Industrial Source: IPD Source: IPD 10
MARKET UPDATE Dublin residential market also showing strong growth from depressed levels Residential prices now growing across the country Average residential property prices 30% 500,000 450,000 20% 400,000 % YoY 10% 0% 350,000 300,000 250,000 200,000-10% 150,000-20% Data released since IPO 100,000 50,000 Data released since IPO 0-30% Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Dublin ex Dublin Dublin ex Dublin Source: CSO Source: ptsb/esri, CSO, Goodbody 11
MARKET UPDATE Rental market: Dublin office dynamics Number of Grade A vacant buildings in Dublin IFSC, 2 and 4 Vacant space by geography and quality 10 IFSC 5,000 Grade A 9 Dublin 2 Grade B 8 2 Dublin 4 4,000 Grade C 7 6 5 4 3 2 1 0 7 3 2 2 0-9,999 10,000 - sq.ft. 19,999 sq.ft. 1 1 20,000-29,999 sq.ft. 4 30,000-39,999 sq.ft. 1 2 40,000-49,999 sq.ft. Only 1 building of >50,000 sq. ft. currently vacant, down from 5 at end of Q2 2013 50,000-59,999 sq.ft. 60,000-69,999 sq.ft. 70,000-79,999 sq.ft. 80,000-89,999 sq.ft. 90,000-99,999 sq.ft. 1 100,000-150,000 149,999 sq.ft.+ sq.ft Thousands (sq.ft.) 3,000 2,000 1,000 0 IFSC Dublin 2 Dublin 4 Rest of Dublin Dublin City Source: Jones Lang LaSalle Q2 take-up of 0.42m sq. ft. brings the year to date take up to 1.02m sq. ft. Total take up for 2014 expected to be in line with 2013 s total of 1.92 million sq. ft. Currently 1.3 million sq. ft. of active requirements in the market Source: Jones Lang LaSalle Prime quoted rents in the city centre have increased to 45 per sq. ft. with rents in excess of 40 per sq. ft. being achieved Evidence of longer leases of 20 25 years is more common in the market with first break options at year 10 in the city centre CBRE forecasting prime rents at c. 60psf by 2020 (1) Source: Jones Lang LaSalle Dublin Office Market Report Q2 2014, (1) CBRE Outlook 2014 12
MARKET UPDATE Rental market: Dublin office dynamics (cont d) Dublin office take-up expected to be c.2m sq.ft. in 2014 Dublin geographic take-up Million sq.ft. 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Forecast Take Up 20 Year Average H1 2014 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 48% 44% 41% 36% 52% 56% 59% 64% 2011 2012 2013 H1 2014 City Centre Suburbs Source: Jones Lang LaSalle Source: Jones Lang LaSalle Vacancy reducing and very limited new supply Q2 2014 Dublin take-up by sector 40 5.0 Million sq.ft. 30 20 10 0 4.0 3.0 2.0 1.0 0.0 Suburbs CBD 373,697 sq.ft. 650,649 sq.ft. Q4 2001 Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q2 2014 Occupied Stock Vacant Stock Under Construction TMT Insurance and Pension Funds Other Transport and Storage Banking and Fin. Source: Jones Lang LaSalle Source: Jones Lang LaSalle 13
MARKET UPDATE Investment market: volumes of transactions picking up sharply 5,000 4,500 4,000 3,500 millions 3,000 2,500 2,000 1,500 Ø 1,152m 1,000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note: Excludes IBRC loan sales of 9.3bn nominal value Total Investment Volumes Loan Sales Forecast Direct & Loan 12 year average H1 direct property sales of 1.7bn have already achieved 90% of total volume for 2013, when 1.9bn was transacted Large supply pipeline in H2 2014, with NAMA, Bank of Ireland and Ulster Bank expected to be the most significant sellers Source: Jones Lang LaSalle 14
MARKET UPDATE Irish property market recovery leading to increased disposals by NAMA in Ireland NAMA s Irish disposals continue to increase as focus shifts away from London back towards Ireland 3,000 Cumulative Irish Disposals by NAMA ( m) Irish Disposals as a % of NAMA total 2,500 2,000 1,500 50% 1,000 500 13% 22% 0 Q1'10 Q3'10 Q1'11 Q3'11 Q1'12 Q3'12 Q1'13 Q3'13 Q1'14 2012 2013 2014 YTD July To date in 2014, our (total) sales are over 5bn. 50% of that has come from Irish sales Frank Daly, NAMA Chairman, 4 July 2014 Senior figures within NAMA and the Irish government are suggesting that the rate of Irish disposals is likely to increase New redemption target of 80% (of NAMA senior debt) by 2016 Michael Noonan, Minister of Finance, 16 July 2014 We currently estimate that we will need to sell about 6bn in Irish assets over the period from 2014 to 2016 Brendan McDonagh, NAMA CEO, 29 May 2014 Sales of NAMA-owned assets in Ireland have accelerated in recent months and this trend looks set to continue Source: NAMA, Investec, press reports 15
MARKET UPDATE NAMA s portfolio well suited to Hibernia s investment proposition NAMA loans: split by geography (Dec-13) NAMA loans in Dublin: split by type (Dec-13) Hotel & Leisure 5% Other 3% Rest of Ireland 4% Rest of Britain 12% London 18% Rest of World 10% Cork 6% DCB 5% Dublin 38% 43% of NAMA s total portfolio is Dublin based Land 13% 19.6bn (1) 7.5bn (2) Development 15% Residential 20% Office 24% Industrial 2% Retail 18% 64% of NAMA s Dublin assets in Hibernia target sectors Limerick 1% Galway 2% Northern Ireland 4% A significant portion of NAMA s portfolio is in central Dublin and the adjacent commuter belt Within the Dublin area, commercial office space and other Hibernia investment priorities make up the majority of assets DCB = Dublin Commuter Belt Source: NAMA, Investec Note: Split of AuM in NAMA portfolio as of 31-Dec-2013 (1) NAMA carrying value of loans (total portfolio) as at 31-Dec-13 (2) NAMA carrying value of loans in Dublin as at 31-Dec-13 16
MARKET UPDATE Investment market: availability of assets Total value of commercial property transactions has increased significantly since IPO NAMA See prior slides Acceleration of sales expected to hit new target of redeeming 80% of senior debt (a cumulative 24 billion) by 2016 Banks IBRC: The Residential Mortgage loan sale, completed on 6 June 2014, resulted in the disposal of 64% of IBRC s Residential Mortgage book Ulster Bank: Disposal of 9bn in Irish investment and development loans kicked off in February 2014 with 850m sale process for portfolio of commercial loans Permanent TSB: To sell commercial loan book of 2.6bn Domestic banks: continue to make selective loan sales Other Private equity funds, active over last 18 months in Ireland, have become increasingly active in other EU markets and some are exploring opportunities to exit Irish assets particularly where project management expertise is required JV opportunities NAMA has confirmed it will engage in JV opportunities with suitable partners, as have some PE funds, and these opportunities will most likely emerge where project management expertise is required (1) Source: Jones Lang LaSalle JLL forecasting direct property and commercial loan transactions totalling 4bn in 2014 (1) 17
Agenda Operating and financial highlights Market update Acquisitions Conclusion and outlook 18
ACQUISITIONS Location of Hibernia acquisitions Office acquisitions all within CBD; ex-cbd acquisitions both with good transport Central Dublin acquisitions N2/M2 Northwest Business Park M50 N3/M3 Blanchardstown Clondalkin Castleknock N4/M4 Palmerstown N7/M7 3 Ballymount Tallaght The Ward M50 Phibsborough Kimmage Dublin N81 Rathfarnham Dublin Airport Ballymun Drumcondra M1 Beaumont 9 8 2 5 6 4 7 Clontarf Ballsbridge Dundrum 1 Northern Cross Blackrock 1 Wyckham Point Portmarnock Sutton North Bull Island 2 New Century House Howth 3 Gateway Site N11 4 Montague Glenageary House and Hardwicke House Kings Inns 5 St. Stephens Green 4 Fairview Park Croke Park 2 9 Alexandra Basin River Liffey 8 7 6 5 Chancery Building and Chancery Apartments M50 6 Hanover Building 7 Windmill Lane 8 Observatory Herbert Park 9 Guild House and Commerzbank House Source: Google Maps, Visit Dublin, Jones Lang LaSalle Note: Hibernia acquisitions shown in red. 19
ACQUISITIONS Summary of Dorville portfolio loan acquisition Off market acquisition of 67m Dorville loan portfolio from Ulster Bank Gaining access to a portfolio of 16 assets, principally residential Hibernia to retain three core assets and undertake phased disposal of the other assets Summary Core assets Ascribed value Wyckham Point Residential 30m Cannon Place Residential 6m South Dock House Office 5m 41m Non core assets Ascribed value 8 residential assets 19m 2 office assets 2m 3 development assets 5m 26m 20
ACQUISITIONS Wyckham Point Acquisition type Off-mkt On-mkt Property Loan Dev. opportunity Property type Office Grade A CBD Income producing Value-add space Retail Low tenant risk Prime Dublin Dundrum, Dublin 16 Acquired as part of 67m Ulster Bank loan portfolio Apportioned value of c. 30m Comprises: Wyckham Point 213 partially completed apartments Mix of one, two and three bed apartments Excellent amenities incl. 3 acre park with lake, gym, creche Prime south Dublin residential location close to Dundrum Shopping Centre Industrial Prime location Strong covenant Residential Infill Wyckham Point planned timeline to complete Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Stage 1 - Pre Construction Stage 2 - Construction Stage 3 - Turn-key fit-out 21
ACQUISITIONS Cannon Place Acquisition type Off-mkt On-mkt Property Loan Dev. opportunity Property type Office Grade A CBD Income producing Value-add space Retail Low tenant risk Prime Dublin Herbert Road, Dublin 4 Acquired as part of 67m Ulster Bank loan portfolio Apportioned value of 6m Comprises 12 two and three-bed apartments in a 22 unit apartment block Well-located modern estate Walking distance from Sandymount and Ballsbridge villages Close to Lansdowne DART station and the Aviva Stadium Industrial Prime location Strong covenant Residential Infill 22
ACQUISITIONS South Dock House Acquisition type Property type Office Retail Off-mkt On-mkt Property Loan Dev. opportunity Grade A CBD Income producing Value-add space Low tenant risk Prime Dublin 1st Floor Offices, Hanover Quay, Dublin 2 Acquired as part of 67m Ulster Bank loan portfolio Apportioned value of c. 5m, equating to 530psf capital value Asset comprises One floor of 8,942 sq ft in three office suites with parking for 9 cars Let to 3 tenants (Open Hydro Ireland, Collins Stewart, Guggenheim Partners) Annual rent of 312k, average of 35psf WAULT of three years Industrial Prime location Strong covenant Residential Infill 23
ACQUISITIONS New Century House Acquisition type Property type Office Retail Off-mkt On-mkt Property Loan Dev. opportunity Grade A CBD Income producing Value-add space Low tenant risk Prime Dublin Mayor Street, IFSC Dublin 1 Acquisition price 47m: equating to 587psf capital value Asset comprises 80,000 sq ft offices over six storeys with parking for 87 cars Let to Bank of Ireland on FRI lease until 2024, with upward-only rent review in 2019 Annual headline rent 2.85m, or 32psf, with rental abatement until October 2015 Initial yield (post-abatement period): c.6% Significant refurbishment work is about to be implemented by the tenant Industrial Prime location Strong covenant Residential Infill 24
ACQUISITIONS Gateway Site Acquisition type Off-mkt On-mkt Property Loan Dev. opportunity Property type Office Grade A CBD Income producing Value-add space Retail Low tenant risk Prime Dublin Newlands Cross, Naas Road, Dublin 22 Acquisition price: 10.1m Comprises 14.1 acres (5.71 ha) with three large industrial/logistics facilities of 177,960 sq. ft. Buildings currently 46% occupied and producing an annual rental income of 517k or c. 5.5psf Initial yield c.5% Strategic location adjacent to intersection of Ireland s two busiest roads and Dublin s light rail system Significant redevelopment potential Industrial Prime location Strong covenant Residential Infill 25
ACQUISITIONS Montague House & Hardwicke House Acquisition type Property type Office Retail Off-mkt On-mkt Property Loan Dev. opportunity Grade A CBD Income producing Value-add space Low tenant risk Prime Dublin Hatch Street Upper & Adelaide Road, Dublin 2 Acquisition price: 60m, equating to 692psf capital value Acquisition from Hardwicke Group in partially deferred transaction structure Initial acquisition of 18.25m of loans (giving operational control) with NIY of 7.7% Right to take full ownership of the buildings any time up to mid-2016 for incremental 41.75m Assets comprise 88,483 sq ft of prime Grade A office space in two 5 storey buildings on contiguous back-to-back sites with 56 basement car parking spaces Both multi-let at avg rent of 30psf (Hardwicke 34psf, Montague 27psf) WAULT of 7 years 100% of rent to be reviewed during or prior to 2018 28% with break clauses in 2016 Industrial Prime location Strong covenant Residential Infill 26
ACQUISITIONS Chancery Building & Chancery Apartments Acquisition type Property type Office Retail Off-mkt On-mkt Property Loan Dev. opportunity Grade A CBD Income producing Value-add space Low tenant risk Prime Dublin Chancery Lane, Dublin 8 Acquisition price: 16m Acquiring loans from Bank of Ireland, giving full ownership of assets Assets comprise a) office building with 33,799 sq. ft. space over 6 stories with 19 parking spaces Allocated price of 15m for the offices equates to cap. val. of 445psf Fully let with WAULT of 9 years and 2 years to break Average passing rent of 30psf Net initial yield 6.8% b) four 2 bed apartments in same building with separate entrance Fully let on 1 year contracts Allocated price of 1m for the apartments equates to a net initial yield 6.1% c) a small 0.05 acre site with planning consent for a c. 13,900 sq. ft. NIA office building or a 45 suite student accommodation building Industrial Prime location Strong covenant Residential Infill 27
ACQUISITIONS The Hanover Building Acquisition type Off-mkt On-mkt Property Loan Dev. opportunity Property type Office Grade A CBD Income producing Value-add space Retail Low tenant risk Prime Dublin Windmill Lane, Dublin 2 Acquisition price: 20.2m, equating to 360psf cap. val. and 7.3% NIY Asset comprises 5 storey building and 13 underground parking spaces with: a) 44,317 sq. ft. of office space on upper floors Fully let to BNY under leases running to 2026/7 with break clause in 2016 Average passing rent on office space of 30psf b) 11,614 sq. ft. of retail space on ground floor Fully let to Eurospar to 2032 with break clause in 2019 Office and retail income all subject to rent reviews in 2017 and 2018 South Docks area one of most popular office locations in recent years Adjoins the 1 acre Windmill Lane Site acquired in simultaneous transaction from a separate seller Industrial Prime location Strong covenant Residential Infill 28
ACQUISITIONS Windmill Lane Site Acquisition type Off-mkt On-mkt Property Loan Dev. opportunity Property type Office Grade A CBD Income producing Value-add space Retail Low tenant risk Prime Dublin Windmill Lane, Dublin 2 Acquisition price: 7.5m 1 acre development site adjoining Hanover Building in South Docks area Existing planning consent for: 125,000 sq. ft. (net) office space 9,000 sq. ft. retail 15 residential units Price paid for land equates to 50psf on the net developable space 12 month option to a party to invest on a side by side, equal cost basis on the redevelopment of the Hanover Building and the Windmill Lane Site Industrial Prime location Strong covenant Residential Infill 29
ACQUISITIONS The Observatory Building Acquisition type Off-mkt On-mkt Property Loan Dev. opportunity Property type Office Retail Grade A CBD Income producing Value-add space Low tenant risk Prime Dublin Sir John Rogerson s Quay, Dublin 2 Acquisition price 51.5m Asset comprises a) 84,000 sq ft office over six storeys with parking for 47 cars Allocated price of 49.8m for the offices equates to cap. val. of 590 psf 95% let with WAULT of 11 years and 4 years to break Tenants include Riot Games, Publicis, Morgan Stanley & Realex Payments Low average rent of 26psf Annual headline rent of 2.2m, with rent frees on 1.2m ending in 2015 and early 2016 Initial yield (post-rent free periods): c.4.1% b) Eight partially completed 2 bed live / work units and two retail units Allocated price of 1.7m Industrial Prime location Strong covenant Residential Infill 30
ACQUISITIONS Guild & Commerzbank House Acquisition type Property type Office Retail Off-mkt On-mkt Property Loan Dev. opportunity Grade A CBD Income producing Value-add space Low tenant risk Prime Dublin Guild Street, IFSC, Dublin 1 Acquisition price 90.75m Purchase of two adjoining buildings in the IFSC. The buildings comprise: 144,250 sq. ft. of office accommodation over five storeys with parking for 148 cars Cap. val. of 629 psf 100% let with WAULT of 3 years to break and 11 years to expiry Tenants include FBD Holding Ltd, BNY Mellon and Commerz Management Services Average rent of 39psf Annual headline rent of 6.1m Initial yield: 6.6% Industrial Prime location Strong covenant Residential Infill 31
Agenda Operating and financial highlights Market update Acquisitions Conclusion and outlook 32
CONCLUSION AND OUTLOOK Conclusion Highly active period since full year results to 31 March 2014 Completed eight acquisitions, totaling 267m, primarily of Dublin CBD offices Three new hires including CFO, bringing management team to 12 Support from the wider WKN team of 33 people Portfolio taking shape Have invested 336m, over 90% of net proceeds raised in December 2013, with a further 63m committed Summary of portfolio statistics 76% (by cost) in Dublin CBD offices, remainder between residential and logistics, all within Dublin Portfolio NIY 4.1% (4.7% post rent free periods / abatements) Strong reversionary potential: weighted average contracted rents for offices of 33 per sq. ft. Development project at Wyckham Point and development opportunities at Windmill Lane and Gateway sites Outlook Very high level of transaction volumes in Dublin office market currently and NAMA to accelerate portfolio sell-down Management are finding attractive acquisition opportunities within the Dublin office market, particularly in off-market and loan spaces Hibernia is considering various funding options: in first instance seeking to put in place debt 33
Agenda Appendix 34
APPENDIX Strong board with mix of property and plc experience Hibernia REIT plc Danny Kitchen Independent Non-Executive Chairman Stewart Harrington Independent Non-Executive Director Terence O Rourke Non-Executive Director Colm Barrington Independent Non-Executive Director Bill Nowlan Non-Executive Director Governance Non-Executive Chairman of Workspace Group plc and Non-Executive Director of LXB Retail Properties plc Previously Finance Director of Green Property plc Non-Executive Director of BWG Group and Stafford Holdings Previously a Partner Jones Lang Wootton (now Jones Lang LaSalle) Founding Partner of Harrington Bannon Chartered Surveyors Non-Executive Director of The Irish Times and Chairman of Enterprise Ireland Previously Managing Partner KPMG Ireland Non-Executive Chairman of Aer Lingus plc and CEO and Director of Fly Leasing Ltd Previously Head of Property Investment of Irish Life from 1985 to 1995, the largest property fund manager in Ireland. Established WK Nowlan in 1995, one of the largest property asset managers in Ireland WK Nowlan REIT Management Breadth of skill set and experience encompassing institutional property management and development in prime and value add space, with strong relationships with key decision makers in banking and property Kevin Nowlan Chief Executive Officer Bill Nowlan Investment Director Frank Kenny Portfolio Management Director Frank O Neill Chief Operations Officer Tom Edwards- Moss Chief Financial Officer Management >20 years of experience in the Irish property market Previous positions include Senior Portfolio Manager at NAMA, Portfolio Manager at Treasury Holdings and Assistant Manager at Anglo-Irish Bank plc >40 years of experience advising on investment in Irish commercial property Previously Head of Property Investment of Irish Life from 1985 to 1995, the largest property fund manager in Ireland. Established WK Nowlan in 1995, one of the largest property asset managers in Ireland >35 years of experience in the Irish and US property markets Founder and CEO of Willett Companies LLC, boutique investment company which managed, developed and/or owned 2 million sq ft of real estate >20 years of experience in the Irish property market Previously, manager of WK Nowlan Property Management Division, covering Irish and UK properties Previously worked for 9 years at Credit Suisse in Investment Banking Division with a particular focus on corporate finance in the real estate sector. He qualified as a Chartered Accountant at PricewaterhouseCoopers in 2005 WK Nowlan Property Support WK Nowlan is a property asset management company staffed by 33 professional staff with capacity to execute multiple transactions simultaneously The team has a broad mix of skills covering all the key professional aspects of property management and development: surveyors and valuers, architects, engineers, portfolio managers and financial analysts Capacity to execute multiple transactions simultaneously Ability to manage complex commercial and residential projects 35
APPENDIX Financial highlights as of 31 March 2014 Financial highlights 31 March 2014 Gateway Site acquired [ ] Balance sheet 000 Notes Loans acquired from Ulster Bank (Wyckham assets) Loans 68,563 Principally Loans acquired cash from + cash Ulster equivalents Bank (Wyckham of [ ] assets) Current assets 303,337 Principally cash + cash equivalents of 291.7m Current liabilities (934) Principally accrued acquisition costs and other trade payables Net assets 370,966 EPRA NAV per share 96.4 cents Income statement 31 March 2014 Notes Net loss (846) Reflects operating expenses of 1.2m and modest interest income on cash deposits Basic and diluted loss per share (0.22) cents Financials reflect the fact most of the acquisitions did not close in the first 90 days of operations 36
APPENDIX Overview of the Irish REIT regime Summary of Irish REIT regime Summary of Irish REIT regime Established Introduced by Finance Act 2013 Legal form Irish incorporated PLC company with an allotted share capital of not less than 38,092 Shareholder requirements No closely held company; 10% threshold for corporate shareholders Listing requirements Listed on the main market of a stock exchange in an EU Member State Business restrictions >75% of aggregate income derived from property rental business >75% of portfolio market value must relate to property rental business Within 3 years of commencement, the REIT must hold at least 3 separate assets, none of which having a market value >40% of total portfolio Irish and non-irish assets Authorised sectors: commercial properties, industrial properties, residential properties Leverage restrictions Profit financing ratio of at least 1.25 : 1 Profit financing ratio = property income plus property finance costs divided by property finance costs Tax Tax exemption for certain income from property rental business, 12.5% for non property rental income Tax exemption for capital gains, 33.0% for non property rental assets Dividend withholding tax of 20.0% Irish stamp duty of 1.0% apply to the purchase of shares in a REIT Distribution requirements Property income: 85% Capital gains: no distribution obligation Source: European Public Real Estate Association 37
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