The €25m programme follows the group’s disposal of 77 Sir John Rogerson’s Quay in Dublin 2 for €35m, the net proceeds of which will be used to buy the shares.
Colm Lauder, analyst at Goodbody, said the move aligned with commentary that Hibernia would consider a capital recycling programme given the “strong demand” by institutional investors for dry assets in the Dublin office investment market.
“Hibernia is currently trading at a 22pc discount to its last published net asset value of €1.70 and has taken advantage of the fact that it can dispose of assets such as 77 Sir John Rogerson’s Quay at a (modest) premium to book value given current market conditions,” Mr Lauder said.
He said any impact to the groups rental income from the disposal would be “largely offset” through growth elsewhere in the portfolio.
The buyback will commence today and may continue until the end of the year, subject to market conditions and the ongoing capital requirements of the business, according to a statement from the group.
The maximum number of ordinary shares to be repurchased under the programme is 69,758,891.
The Sir John Rogerson’s Quay office block, near the Samuel Beckett bridge, was acquired by Hibernia last year for €28.7m, and has been sold to a European institutional investor. Along with the initial acquisition cost and improvement works Hibernia spent a total of €31.6m on the building, meaning that the group has made a cash profit of 12pc in just over 12 months.
The block is fully let to International Workplace Group (IWG), producing rental income of €1.8m per year, with four years to next rent review and 14 years remaining on the rental contract. Yesterday’s price reflects a net initial yield of 4.6pc and a capital value of €1,040 per sq. ft. for the office accommodation.
Kevin Nowlan, Hibernia Reit CEO, 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.”
Goodbody Stockbrokers has been enlisted for the buyback programme.