Hibernia REIT has exchanged contracts to sell 77 Sir John Rogerson’s Quay for €35.5m. The price is modestly ahead of the December 2018 book value and reflects a net initial yield of 4.6% and a capital value of €1,040 per sq. ft. for the office accommodation. Completion is expected to occur in April 2019.
The property is situated at the junction of Sir John Rogerson’s Quay and Benson Street, towards the eastern end of Dublin’s South Docks, and comprises 34,400 sq. ft. of office accommodation and 20 parking spaces. It is fully let to International Workplace Group plc (“IWG”), producing rental income of €1.8m per annum (€50 per sq. ft. for the office space), with four years to next rent review and 14 years term certain remaining.
Hibernia acquired 77 SJRQ in February 2018 and simultaneously agreed a long lease with IWG: the purchase price of €28.7m equated to a capital value of €850 per sq. ft. for the office accommodation and a net initial yield of 5.8%, rising to 6.3% following a fixed uplift at first rent review. The sale gives Hibernia an ungeared IRR on the investment of more than 15%.
Hibernia intends to the return the net proceeds of the sale of €35m to shareholders and, based on currently available distributable reserves, has today announced an initial on-market share buyback programme of up to €25m.
The Share Buyback Programme will commence on 2 April 2019 and may continue until 31 December 2019 subject to market conditions, the ongoing capital requirements of the business and termination provisions customary for arrangements of this nature. The maximum number of ordinary shares to be repurchased under the Share Buyback Programme is 69,758,891 and these may be repurchased on either Euronext Dublin or the London Stock Exchange. The purpose of the Share Buyback Programme is to reduce the Company’s share capital and it is intended that shares repurchased will be canceled.
Kevin Nowlan, Chief Executive Officer, said they acquired 77 SJRQ in early 2018 and simultaneously agreed to let the entire building to IWG on a long lease. “This, together with the improving surroundings in the eastern end of the South Docks, has resulted in a significant uplift in value during our ownership. The sale allows us to concentrate on our larger investments and our development pipeline. We intend to return the net proceeds of €35m to shareholders to maintain our progress towards our leverage target, starting with the €25m share buyback programme we have announced today.”