Hibernia REIT has returned to the capital raising trail seeking a further €300m, as the Irish real estate trust continues to capitalise on continuing NAMA and bank de-leveraging to build upon its circa €500m predominantly Dublin property portfolio.
Hibernia, which announced the capital raising plans yesterday, said it plans to invest to net proceeds, estimated at €287m, over the coming 18 to two years through the issuance of 285.3m new ordinary shares at €1.05, reflecting a 7.5% discount to the closing price on 7 October.
The bookbuilding could be closed as early as later today and is expected to be supported by existing shareholders, as well as from several new international funds.
Hibernia has maintained its total return target range of between 10% and 15%, when fully invested, and confirmed plans to declare a maiden dividend for the six months to 30 September 2014 in its November 2014 interim results.
Since raising net proceeds of €372m in its December 2013 initial public offering, Hibernia has invested €398m and committed a further €78m in connection with 13 transactions, one of which is pending completion.
Kevin Nowlan, chief executive officer of W.K. Nowlan REIT Management Limited, Hibernia’s investment manager, said in a statement: “We have achieved a significant amount since the IPO in December 2013, building a portfolio of Dublin properties primarily in Dublin’s Central Business District which have increased in value by 9.3% from acquisition to 31 August 2014, a weighted average hold period of 2.9 months.
“We have undertaken 13 transactions to do this, with 87% of the acquisitions (by cost) executed off-market and 44% through loan purchases. There continue to be significant levels of attractive acquisition opportunities in our core Dublin markets, particularly in the off-market and loan spaces, and we anticipate this remaining the case for the foreseeable future.
“Furthermore, the portfolio we have assembled to date offers a number of development, redevelopment and refurbishment opportunities: we will use some of the funds we are seeking to raise to take advantage of these opportunities.”
Irish commercial property asset values have increased 20% over the five quarters to the end of June 2014 at the all property level, which remains 61% below peak values as at end end of September 2007, according to Jones Lang LaSalle data.
Over the six-month period to end of June, JLL recorded 103 transactions with a total value of €1.7bn.
Quarterly data from the second quarter of 2014 shows that, on a quarterly basis, both rental values and capital values continue to increase, rising 9% and 5%, respectively.
Hibernia said it believes that the next 12 to 24 months will continue to see a significant volume of transactions, driven in particular by de-leveraging by banks and other institutions.
On 16 July 2014, Ireland’s Minister for Finance announced an acceleration of NAMA’s de-leveraging programme, with a new redemption target of 80% of NAMA senior debt by the end of 2016, implying a circa €9bn loan de-leveraging.
Hibernia said in yesterday’s statement: “The group’s principal use of the net proceeds will be to fund future property investments (both acquisitions (directly or indirectly) and capital expenditure on existing and future property investments) consistent with the investment policy of the group.”
In August, Hibernia extended the existing owners of Cumberland House, the Christopher Bennett Group, with a €38m six-month bridge loan to enable the sale of vacant office block in Dublin 2 to the Irish real estate investment trust ahead of a major refurbishment.
The deal to is progressing but is still not completed.
Hibernia’s existing shareholders include Geogre Soros’ Quantum Strategic Partners, as well as recent increased allocations by Invesco and OppenheimerFunds.
The REITs shareholders also includes Wellington Management Company,The College Retirement Equities Fund, managed by TIAA-CREF Investment Management, Putnam Investments, Marshall Wase, MainStay Funds Trust and funds managed by Moore Capital Management.