Hibernia Reit receives takeover offer valuing it at more than €1bn

Ireland's largest listed office landlord, Hibernia Reit, has received a takeover offer that values the business at more than €1 billion. The approach is from Benedict Real Estate Bidco, a subsidiary of one of Canadian giant Brookfield Asset Management's real estate private funds.

Hibernia’s board, whose members own about 1.37 per cent of the company’s shares, have unanimously recommended the offer to shareholders.

Brookfield is one of the world’s largest owners and operators of property with more than $250 billion (€227bn) of property assets globally, and an office portfolio of about 200 million sq ft worldwide.

Bidco and Hibernia Reit said on Friday they were “pleased to announce” they had reached agreement on the terms of the cash offer by Bidco.

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Under the terms of the acquisition, Hibernia Reit shareholders would receive €1.634 in cash for each Hibernia Reit share. This would be made up of €1.60 per share and a dividend of 3.4 cent per share.

The acquisition, including the dividend, values the entire issued and to be issued share capital of Hibernia Reit at about €1.089 billion on a fully diluted basis. The company is currently valued at about €781 million in the market.

Davy analyst Colin Grant said that, after taxes and costs that will fall to the bidder, the offer, including the dividend, amounted to a 3 per cent premium to the company’s net tangible assets of €1.587 per share.

Premium offer

The offer, excluding the dividend, represents a 35.6 per cent premium to Hibernia Reit’s closing price of €1.18 on Thursday. Including the dividend, it represents a 33.9 per cent premium to Hibernia Reit’s volume weighted average share price of about €1.221 over the three months to close of business on Thursday.

The shares were trading at €1.616 in Dublin on Friday.

Brad Hyler, managing partner and head of European real estate at Brookfield, said the group was “excited to partner with” Hibernia Reit.

“We have built a strong relationship with Hibernia Reit’s management team and are excited to partner with them in the next phase of the company’s development by combining Brookfield’s global real estate expertise with Hibernia Reit’s established operating platform and portfolio of high-quality standing and development assets in Dublin’s most strategic submarkets,” he said.

“We look forward to supporting Hibernia Reit as they continue to create value by capturing demand from top global tenants for modern, sustainable buildings with best-in-class amenities and wellness credentials in prime locations.”

In Europe, Brookfield’s property business comprises about $50 billion of assets across office, student housing, logistics, life sciences, residential, retail and hospitality. Bidco is a newly incorporated Irish company established for the purpose of undertaking the acquisition.

Portfolio of assets

Hibernia Reit chairman Danny Kitchen said: “Despite significant progress against its strategic objectives and a track record of successfully recycling capital into value accretive opportunities, Hibernia Reit has traded at a persistent discount to its prevailing net tangible assets [Epra NTA] per share.

“The acquisition recognises the company’s prospects and the quality of its portfolio of assets and delivers an acceleration of the value we expect to be created from completion of Hibernia Reit’s major office development projects.

“The acquisition allows Hibernia Reit shareholders to realise the value of their investment in Hibernia Reit in cash at a significant premium to Hibernia Reit’s prevailing share price and a premium to its Epra NTA per share, when taking account of the directors’ current estimates of expected latent tax and debt breakage costs for Bidco.”

The company said the financial terms of the acquisition were final and would not be increased, although Brookfield has reserved the right to raise its offer if Hibernia Reit receives an alternative proposal.

The companies said it was intended that the acquisition would be implemented by means of a High Court sanctioned scheme. It also required an approval by Hibernia Reit shareholders at an extraordinary general meeting.

Shareholders are expected to receive a scheme document with further information late in the second quarter.