TIDMHBRN
RNS Number : 6811L
Hibernia REIT PLC
04 October 2016
Publication of Circular
Hibernia REIT plc ("Hibernia" or the "Company") announces that
it has issued a Circular to Shareholders (the "Circular")
containing a notice of an Extraordinary General Meeting to be held
at The Marker Hotel, Grand Canal Square, Docklands, Dublin 2,
Ireland at 2.30 p.m. on 26 October 2016 in order to consider a
proposed amendment to the Relative Performance Fee calculation
methodology (the "Amendment") and consequently the Deferred
Consideration element of the Internalisation transaction previously
approved by Shareholders on 27 October 2015.
The purpose of the proposed Amendment is to ensure that the
Relative Performance Fee works as intended to align the interests
of Shareholders and the Management Team until the expiry of all
existing Performance Fee arrangements in November 2018. Under the
Irish Listing Rules and the UK Listing Rules the proposed Amendment
is classified as a Related Party Transaction.
Background
-- As it was documented in the Company's IPO Prospectus, the
Relative Performance Fee is calculated based on the total return of
the Company's Property Portfolio excluding properties purchased,
sold or under development in a quarter against the Reference Index
(SCSI / IPD Ireland Quarterly Property Index - All Property) during
each Accounting Period. The exclusion of assets under development
means any profits (or losses) generated through the change in value
of such assets under development between commencement of
development and practical completion less the cost of development
are not included for the purposes of the calculation of the
Relative Performance Fee.
-- The exclusion of properties under development from the
calculation methodology goes against the intention for the Relative
Performance Fee to incentivise the Management Team to deliver
outperformance of the Irish property market and ensure good
alignment of interests with Shareholders. While remaining within
the limit for development of 15 per cent. of the last reported Net
Asset Value per the Company's investment policy, the Company has a
number of committed development schemes in progress and a
substantial pipeline of potential future developments. These
developments occupy a significant proportion of the Management
Team's resources, have already delivered positive returns for
Shareholders and could deliver significant further returns for
Shareholders over the period to expiry of the IMA in November
2018.
-- To date, no Relative Performance Fees have been payable: from
inception to 31 March 2016 (the most recent measurement period) the
Company is cumulatively 7.5 per cent. behind the Reference Index
under the current calculation methodology and under the terms of
the Relative Performance Fee will need to outperform the Reference
Index by 7.5 per cent. before any fees will be payable. If, over
the same time period (i.e. from the Company's IPO to 31 March
2016), the Company's development assets (and the profits they have
generated for Shareholders, excluding Purchase Costs) had been
included, the Company would have outperformed the Reference Index
cumulatively by 1.5 per cent. (which would have equated to a
Relative Performance Fee payable of c. EUR1.3m).
Proposed amendments to Relative Performance Fee calculation
-- Include assets under development and assets bought (excluding
Purchase Costs) and sold in a quarter in the calculation of the
annual total return of the Company's Property Portfolio compared
against the Reference Index;
-- Start measurement under this amended methodology from 1 April
2016 until the expiry of the Performance Fee arrangements in
November 2018. There will be no back-dating of the new methodology
to the IPO (under which the Investment Manager / Management Team
would have been due a Relative Performance Fee of c. EUR1.3m, as
described above) but neither will the underperformance under the
existing methodology be carried forward. The rolling Reference
Index driven high watermark will therefore start again from 1 April
2016 (e.g. if the Company underperforms compared against the
Reference Index in the year ended 31 March 2017, then this
underperformance will be carried forward in subsequent Accounting
Periods and any Relative Performance Fee will only be payable where
any negative historic Relative Performance Percentage when combined
with the Company's Relative Performance Percentage in any
Accounting Period, results in a positive number); and
-- Reduce the rate of any fee payable from 50 per cent. of 30
per cent. of any outperformance by the Company's Property Portfolio
of the Reference Index to 50 per cent. of 20 per cent. of any
outperformance of the same index (i.e. effective rate reduced from
15 per cent. of any outperformance to 10 per cent. of any
outperformance).
In all other aspects the Relative Performance Fee and the method
of calculating it would remain unchanged and as such any Relative
Performance Fee payable will continue to be satisfied over 90% in
Ordinary Shares with the balance in cash as described in the
Circular.
The Board, which has been so advised by Credit Suisse and
Goodbody, considers the Amendment to be fair and reasonable so far
as the Shareholders of the Company are concerned. In providing
advice to the Board, Credit Suisse and Goodbody have taken into
account the Board's commercial assessments of the Amendment. In
addition, the Board considers the Resolution to be in the best
interests of the Shareholders as a whole. Accordingly, the Board
unanimously recommends that Shareholders vote in favour of the
Resolution.
As related parties who are also Directors, Kevin Nowlan, William
Nowlan and Thomas Edwards-Moss have taken no part in the Board's
consideration of the Amendment or the Resolution and will not vote
their own shares (9,359,018 Ordinary Shares representing
approximately 1.37 per cent. of the Total Ordinary Shares in Issue)
on the Resolution and will take all reasonable steps to ensure that
each of their associates who are beneficially interested in
Ordinary Shares will not vote on the Resolution. Furthermore, none
of Frank Kenny, Frank O'Neill, Richard Ball and Sean O'Dwyer will
vote their own shares (6,260,848 Ordinary Shares representing
approximately 0.91 per cent. of the Total Ordinary Shares in Issue)
on the Resolution and will take all reasonable steps to ensure that
each of their associates who are beneficially interested in
Ordinary Shares will not vote on the Resolution.
All members of the Board who hold beneficial interests in
Ordinary Shares (other than Kevin Nowlan, William Nowlan and Thomas
Edwards-Moss who shall not be entitled to vote at the Extraordinary
General Meeting) (1,453,801 Ordinary Shares represent approximately
0.21 per cent. of the Total Ordinary Shares in Issue) intend to
vote in favour of the Resolution.
Capitalised terms used in this announcement and not otherwise
defined shall have the meaning given to them in the Circular.
ENDS
Contacts:
Hibernia REIT plc +353 1 536 9100
Kevin Nowlan, Chief Executive Officer
Tom Edwards-Moss, Chief Financial Officer
Credit Suisse (UK Sponsor) +44 207 888 8888
Charles Donald
James Green
Hugh Preston
Goodbody (Irish Sponsor) +353 1 667 0400
Linda Hickey
Kevin Keating
John Flynn
Murray Consultants
Doug Keatinge: +353 86 037 4163,
dkeatinge@murrayconsultants.ie
Jill Farrelly: +353 87 738 6608,
jfarrelly@murrayconsultants.ie
About Hibernia REIT plc
Hibernia REIT plc is an Irish Real Estate Investment Trust
("REIT") and is listed on the Irish and London Stock Exchanges. The
principal activity of the Company is to acquire and hold
investments in Irish property (primarily commercial property) with
a view to maximising shareholder returns.
FURTHER INFORMATION
Note regarding Times and Dates
The times and dates set out above and mentioned in the Circular,
the Form of Proxy, and in any other document issued in connection
with the transaction are subject to change by the Company, in which
event details of the new times and dates will be notified to the
Irish Stock Exchange, the UK Listing Authority, the London Stock
Exchange and, where necessary and appropriate, to Shareholders.
Documentation
A copy of the circular has been forwarded to the Irish Stock
Exchange and will shortly be available for inspection at the
following address:
Company Announcements Office
Irish Stock Exchange
28 Anglesea Street
Dublin 2
Ireland
Copies of the Circular will also be available shortly in
electronic form on the Company's website (www.hiberniareit.com) and
for inspection in physical form between the hours of 9:30 a.m. and
5:30 p.m. on any business day from the date of this Circular until
the Extraordinary General Meeting at the offices of the Company at
South Dock House, Hanover Quay, Dublin 2, Ireland and on the
document viewing facility on the UK National Storage Mechanism
(http://www.morningstar.co.uk/uk/NSM).
This information is provided by RNS
The company news service from the London Stock Exchange
END
CIRMIBITMBIMBJF
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