Property investment company Hibernia Reit said on Monday that it has agreed to sell 77 Sir John Rogerson’s Quay, which is fully let to International Workplace Group, for € 35.5 million. Hibernia intends to the return the net proceeds of the sale to shareholders, and has announced an initial on-market share buyback programme of up to € 25 million, the first time it has bought back its own stock.
Hibernia acquired 77 SJRQ in February 2018 for € 28.7million and simultaneously agreed a long lease with IWG. This equated to a capital value of € 850 per sq ft for the office accommodation. The sale however, which is due to complete in April, marks a significant increase on this, with a sale price of €35.5 million reflecting a capital value of € 1,040 per sq ft.
Fully let to IWG, the 34,400 sq ft office produces rental income of € 1.8 million a year, or €50 per sq ft, with four years to the next rent review.
The sale gives Hibernia an ungeared IRR on the investment of more than 15 per cent.
Kevin Nowlan, chief executive of Hibernia said: "We 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 € 35 million to shareholders to maintain our progress towards our leverage target, starting with the € 25 million share buyback programme we have announced today.”
Share buyback
The share buyback programme will begin tomorrow, April 2nd, and may continue until December 31st subject to market conditions.
Up to 69,758,891 shares will be repurchased on either Euronext Dublin or the London Stock Exchange.
Colm Lauder, real estate analyst with Goodbody Stockbrokers, said the buyback was "a logical move" to drive shareholder value given it can dispose of assets at a premium to the last NAV and buyback its own shares at a discount.
“Nonetheless, the buyback also suggests accretive investment opportunities, that match Hibernia’s requirements, are now more limited in the Dublin office market as pricing is being driven by European institutional investors with lower costs of capital and more modest total return objectives,” he added.
