Remote working and social distancing strictures have led to much speculation about the future of the office. Modern floor space is among the most expensive in Europe, which has been great for shareholders in Hibernia Reit. The company has an annual rent roll of €62m, and for the year to March 2020 shareholders are being paid €33m dividends, a 36% improvement on the previous year.
With the share at 109c recently, the 4.75c dividend gives a pleasing yield of 4.4%. When the share was sold down to 76c in the March panic, the prospective yield was 6.3%, which is why the price rebounded quickly.
Hibernia Reit ended its financial year with €32m in current assets and €26m in current liabilities. The company had €28m cash and total borrowings of €260m, most of it long-term. As of March 31, Hibernia had net assets of €1,230m, while the market cap at 109c is €745m. Baked into the assets figure is €430m of revaluation gains over the past five years, justified at the time but subject to downward revision depending on how the recession pans out.
As for rental income going forward, CEO Kevin Nowlan is sanguine. In the annual results announcement, he noted that the tenant base is weighted towards the technology sector and state entities “We believe the current crisis is underlining the importance of city centre offices as places for employees to work together and exchange information and ideas,” he enthused.
The company trades assets too. Net sales proceeds of €60m in FY19 funded a €25m share buyback programme. Further trading opportunities will arise, due to the spread between sovereign bonds and prime yields, which should persist in the medium term as central banks drive down interest rates.
Kevin Nowlan, CEO of Hibernia Reit CONOR McCABE