HIBERNIA REIT PLC Capital expenditure on developments in the financial year was EUR16.8m (2020: EUR21.3m) and mostly related to 2 Cumberland Place, our main active development. In August 2020 work started at 50 City Quay, a small refurbishment project in the Windmill Quarter. Both schemes have been delayed by the COVID-19 restrictions in Ireland and are expected to be completed in July 2021, delivering a total of 62,500 sq. ft. of Grade A office space, 38% of which is pre-let. In the financial year we also received a final grant of planning for the redevelopment of Clanwilliam Court. This means the three office schemes in our near-term development pipeline now have full planning permission to deliver 539,000 sq. ft. of Grade A office space, and can be started in early 2022 (Marine House & Clanwilliam Court, most likely as one project) and early 2023 (Harcourt Square). Committed development schemes
Construction is nearing completion at 2 Cumberland Place and 50 City Quay, with delivery expected in July 2021. 24,000 sq. ft. of the 58,000 sq. ft. of offices in 2 Cumberland Place was pre-let to 3M Digital Science Community Ltd, a subsidiary of the 3M Company, in April 2020. In August 2020 work commenced on the refurbishment of 50 City Quay. The 4,500 sq. ft. office building is situated in the Windmill Quarter, adjacent to 1SJRQ and faces the River Liffey. The completion of both schemes has been impacted by COVID-19 restrictions, most notably the closure of construction sites in Ireland from early January until early May 2021 and both are now expected to complete in July 2021. Nonetheless, we are not expecting material cost overruns on either scheme.
Please see further details on the schemes below:
Total area post Full Est. Capex to Est. total cost Office Expected practical
completion (sq. ft.) purchase capex complete (incl. land) ERV1 ERV1 completion ("PC") date
price
2 Cumberland 58k office2
Place, D2 EUR0m3 EUR35m EUR2m EUR598psf4 EUR3.4m EUR56.65psf Jul-21
1k retail/café
50 City Quay, 4.5k EUR3m EUR1m EUR1m EUR935psf EUR0.3m EUR55.00psf Jul-21
D2
62.5k office2
Total
committed EUR3m3 EUR36m EUR3m EUR617psf EUR3.7m EUR56.53psf
1k retail/café 1. Per C&W headline office ERV at Mar-21. 2. In Apr-20, 24,000 sq. ft. (41%) was pre-let to 3M on a 10-year lease 3. The site forms part of Cumberland Place and at the time of acquisition of Cumberland House no value was ascribed to it. 4. Office demise only. Development pipeline
We received a final grant of planning from An Bord Pleanála, the planning appeals board, for the 152,000 sq. ft. redevelopment of Clanwilliam Court after Dublin City Council's initial planning approval was the subject of a third-party appeal. This means we have planning permission now for the three office projects in our near-term development pipeline, Marine House, Clanwilliam Court and Harcourt Square. Together these schemes can deliver 539,000 sq. ft. of Grade A office space in Dublin's Traditional Core, a net increase of 283,000 sq. ft. and a 25% increase in the size of our current in-place office portfolio. We are also assessing the longer-term redevelopment potential of certain other assets within the portfolio.
We can start the redevelopment of Marine House and Clanwilliam Court from early 2022, when the existing leases expire, and we can start the redevelopment of Harcourt Square from early 2023. All three schemes should be profitable under most market conditions: based on the planning approvals we have in place, the valuations of the three properties at 31 March 2021 (which include the present value of the income remaining on the leases) equate to aggregate capital values of EUR306[6] per buildable sq. ft. and the estimated capital expenditure required to deliver the schemes is EUR555 per buildable sq. ft., an all-in cost of EUR861[7] per buildable sq. ft.
We continue to hold 155.2 acres of land with potential for mixed-use development schemes in the longer term: re-zoning will be necessary in all cases and consequently the timing of any future developments remains uncertain at present.
Current area Area post Full
Office Sector completion purchase Comments
price1
(sq. ft.) (sq. ft.)
? Full planning for refurbishment and extension
of Marine House to provide 50k sq. ft. of
office accommodation
Marine House Office 41k 50k EUR30m
? Leases expire during 2021
? Redevelopment opportunity post 2021
141k office ? Potential to create an office cluster similar
Clanwilliam Office 93k EUR59m to Windmill Quarter (with Marine)
Court 11k ancillary
? Final planning grant received Aug-20
? Leased to OPW until Dec-22
? Site offers potential to create cluster of
337k office office buildings with shared facilities or a
Harcourt Office 122k EUR77m major HQ
Square
? Planning granted for 337k sq. ft. of offices
(343k incl. reception areas)
Total office
& ancillary EUR166m
256k 539k
Current area Area post Full
Mixed-use Sector completion purchase Comments
(sq. ft.) (sq. ft.) price1
? Strategic transport location
Newlands Industrial 143.7 acres n/a EUR48m2
(Gateway) / other ? Potential for future mixed-use redevelopment
subject to re-zoning
Dublin 128k on ? Strategic transport location
Industrial Industrial n/a EUR12m ? Potential for future mixed-use development
Estate 7.7 acres subject to re-zoning
Malahide Road 66k warehouse & ? Potential for future mixed-use development
Industrial Industrial 17k office on 3.8 n/a EUR8m subject to re-zoning
Park acres
Total
mixed-use EUR68m
155.2 acres n/a 1. Including transaction costs and capex spent to date. 2. Initial consideration. Asset management Net capital expenditure on maintenance amounted to EUR0.7m in the financial period or EUR0.3m net of refunds (March 2020: EUR0.8m). Contracted rent increased by 2.2% to EUR67.1m (March 2020: EUR65.7m) as a result of: ? Six new lettings adding EUR2.6m, including a pre-let of EUR1.5m; ? Rent reviews concluded and lease variations adding EUR0.7m; ? Acquisitions adding EUR0.5m; and ? Lease expiries, breaks, surrenders and adjustments reducing contracted rent by EUR2.3m.
Some other key statistics at 31 March 2021: ? The vacancy rate of the in-place office portfolio was 7% based on lettable area (March 2020: 7%) and this available
space had an ERV of EUR3.1m, excluding retail and parking (March 2020: EUR4.0m). Including Marine House and Clanwilliam
Court, where the leases are being allowed to expire to enable redevelopment, the vacancy rate was 9%; ? Average rent across the in-place office portfolio was EUR51psf (March 2020: EUR50psf) and the ERV was also EUR51psf
(March 2020: EUR51psf); ? Three office rent reviews were active over 60,000 sq. ft. of office space, with a modest (
contracted rent expected (March 2020: two rent reviews active over 30,000 sq. ft. with a
Office: ? Five new offices leases agreed over 21,600 sq. ft., adding EUR1.1m per annum of gross new rent, and one pre-let on
24,000 sq. ft., adding a further EUR1.5m per annum. Net of expiries, breaks, surrenders and adjustments on let or
licensed space, the total incremental new rent was EUR0.4m per annum. The term certain of the five new leases is 4.1
years and the term certain of the pre-let is 10 years. ? Two rent reviews were concluded over 30,000 sq. ft., increasing contracted rent by EUR0.6m: in aggregate the revised
rents were approximately 60% ahead of the previous contracted rents and modestly ahead of the ERV at the date of
review.
Industrial: ? One rent review concluded over 22,000 sq. ft. and three lease extensions signed over 217,000 sq. ft., increasing
contracted rent by EUR0.1m per annum.
Residential: ? A 3pp increase in the vacancy rate on our 334 residential units to 8% resulted in the contracted annual rent at 31
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