Interim Results

INTERIM RESULTS

For the six-month period to 30 September 2016

10 November 2016

Hibernia REIT plc ("Hibernia", the "Company" or the "Group") today announces its interim results for the six months to 30 September 2016. Highlights for the period:

Steady financial performance in first half

· EPRA NAV per share of 134.6 cent up 2.9% since 31 March 2016

· EPRA earnings of €8.0m (Sep 2015: €5.2m, excluding one-off surrender premium)

· Profit before tax of €32.4m (Sep 2015: €73.7m) including revaluation surplus and gains on disposals

· Interim dividend declared of 0.75 cent per share, representing 50% of dividends paid in respect of prior year, in line with stated policy (Sep 2015: 0.7 cent per share)

Leasing activity adding substantially to contracted rent roll and income duration

· Contracted rent roll now €46.2m, up 18.5% on 31 March 2016[1] following major lettings to ComReg and MTT and the acquisition of Clanwilliam Court

· "In-place" office portfolio income duration and security increased

o WAULT to earlier of break / expiry now 5.9 years, up 37% on 31 March 16

o 46% of rent now upward only or capped / collared at next rent review (Mar 16: 36%)

· Increase in WAULTs driven by completed schemes with WAULT to earlier of break / expiry of 11.1 years and avg. rents of €49psf

· Remaining "in-place"[2] CBD offices have avg. rents of €35psf, reversionary potential of 27% and an avg. period to earlier of rent review or expiry of 2.1 years

Committed development schemes progressing well and on track for delivery over next 20 months

· Three committed schemes (230,000 sq. ft.) scheduled for completion over next 20 months

o Windmill and Sir John Rogerson's Quay remain on track for late 2017 and mid-2018 completions

o Refurbishment of Two Dockland Central expected to complete in late 2017

· Three schemes completed in period totalling 191,000 sq. ft. of new space

o Cumberland delivered profit on cost of more than 59% (71% including value of front site)

o One Dockland Central and SOBO Works both delivered profits on cost in excess of 30%

Longer term development pipeline bolstered

· Acquired Blocks 1, 2 & 5 Clanwilliam Court, Dublin 2, giving (together with Marine House) 134,700 sq. ft. of offices with near term income and redevelopment potential once leases expire in 2020/21

o Planning granted for Phase 2 of redevelopment of Harcourt Square giving total permission for up to 276,500 sq. ft. of offices on the 1.9-acre site: Hibernia seeking vacant possession from OPW to commence redevelopment: court case expected to be heard in early 2017

Building management

· Building management department formed to take control of the management of the Group's multi-let properties and maximise quality of service for tenants

· Cumberland directly managed from Sept and all multi-let buildings expected to follow suit by mid-2017

Low gearing and funding in place to take advantage of opportunities

· Net debt at 30 September 2016 of €110.5m, LTV of 10.7% (Mar 16: €52.9m, LTV 5.7%)

· Cash and undrawn facilities of €312m: €234m net of committed development spend

Kevin Nowlan, Chief Executive Officer of Hibernia, said:

"We have made good progress in the first half of the financial year, growing our contracted rent roll by 18% and increasing the average duration of our income by 37% through new lettings. The value of our portfolio now exceeds €1bn for the first time, a significant milestone to have passed in less than three years in existence.

"While it is still early days, we are optimistic regarding the Dublin office market's prospects to benefit from the UK's decision to leave the EU, although we recognise that the timing and terms remain unclear and there are risks to the wider Irish economy. We are also monitoring closely the impact of the recent property tax changes proposed in the Finance Bill: while these do not affect REITs directly, they may create uncertainty in the investment market in the near term as well as possible opportunities if some parties choose to exit the market.

"As the rate of growth of rents and capital values moderates, development activity and asset management will be increasingly important to delivering performance. With Hibernia owning a portfolio rich in opportunity with a number of committed developments due to complete in the next 20 months and significant firepower to take advantage of any opportunities that arise, we remain positive about our prospects."

Contacts:Hibernia REIT plc +353 1 536 9100Kevin Nowlan, Chief Executive OfficerTom Edwards-Moss, Chief Financial Officer

Murray ConsultantsDoug Keatinge: +353 86 037 4163, [email protected] Farrelly: +353 87738 6608, [email protected]

About Hibernia REIT plc Hibernia REIT plc is an Irish Real Estate Investment Trust ("REIT") 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.

DisclaimerThis Announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Group or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements speak only as at the date of this Announcement. The Group will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority. 

Market Review General economy GDP growth expectations for Ireland have moderated since the result of the UK referendum on EU membership but remain strong at 4.2% in 2016 and 3.5% in 2017 (source: Department of Finance) and compare favourably to GDP growth forecasts for the Euro area of 1.7% in 2016 and 1.5% in 2017 (source: the IMF). Growth expectations for Irish core domestic demand (a better view of underlying economic activity) have also moderated somewhat but 3.3% growth is forecast in 2016, 3.7% in 2017 and 4.0% in 2018 (source: Goodbody) underpinned by strong employment, tax revenues and consumption figures. The level of interconnectedness between the Irish and UK economies may bring risks to Ireland in the near term both from any deterioration in UK economic growth and as a result of the sharp depreciation in sterling. However, in the longer term, we believe Ireland and in particular Dublin, with attractions in terms of language, flexible labour laws, a low corporate tax rate and business friendly regulatory environment is well-positioned to benefit from any business exits from the UK. Foreign direct investment flows from the US and elsewhere in Europe continue to be healthy: at this stage it is unclear what impact, if any, the results of the US elections will have. Irish public sector finances are gradually improving and the Government expects the budget deficit to fall to 0.9% of GDP in 2016 and 0.4% in 2017 (source: Department of Finance). The debt/GDP ratio is likely to decline to 76% by the end of 2016 (source: Davy) and in 2017 the Government is expected to continue its progress towards a balanced budget position (source: Goodbody). Irish property investment market Irish total property returns continue to moderate and the IPD/MSCI Ireland index delivered a total return of 2.1% in Q3 2016 (1.0% capital return and 1.1% income return) down from 3.1% in Q2 2016, bringing year-on-year performance to 14.9% (compared to 23.5% in the year to 31 March 2016). Investment volumes remain high with €3.2bn traded in the nine months to 30 September 2016 vs €4.6bn and €3.5bn in 2014 and 2015, respectively (source: CBRE) with strong demand for "core product" and institutional buyers continuing to be active in the nine months to 30 September 2016. Prime Dublin office yields were stable at 4.65% at 30 September 2016, according to CBRE. The introduction of a 20% withholding tax for property ICAVs and QIAIFs which was announced by the Government in the Budget and Finance Bill in October, and is subject to possible further change when debated and voted on by the Dáil later in November 2016 may, together with the proposed tax changes to S110 companies, create uncertainty in the investment market. The proposed changes do not affect the Irish REITs directly but any impact on capital values as a result of the uncertainty or the changes themselves will likely be felt by all market participants including the REITs. In the event that certain investors exit the market as a result of these changes, Hibernia is well-placed to move quickly in acquiring any assets which enhance the current portfolio. Office occupational market The first nine months of 2016 have seen strong occupier demand in the Dublin office market, with 1.9m sq. ft. of space taken up (source: CBRE). With three large lettings totalling c. 0.4m sq. ft. expected to sign in Q4 2016, take-up figures for the year are likely to be comfortably ahead of the 20-year average of 1.8m sq. ft. and closer to the 2.4m and 2.7m sq. ft. achieved in 2014 and 2015 (source: CBRE).

As a result of strong take-up and muted delivery of new space (thus far), vacancy rates in Dublin have continued their downward trend and the overall rate was 7.6% at 30 September 2016. The CBD vacancy rate was 5.7%, with the CBD Grade A vacancy rate at 3.1% and in Dublin 2/4 (where 73% of Hibernia's office portfolio is located, including two key committed development schemes) the Grade A vacancy rate was 2.1% (source: CBRE). Prime Grade A Dublin office rents ticked up to €60psf in Q3 2016, having been stable at €57.50psf for two quarters (source: CBRE).

The Dublin occupational market continues to be characterised by well-established trends: the city centre is the preferred location, representing 70% of Dublin take up in the five years to December 2015 and 79% in the nine months ending September 2016 (source: CBRE). Similarly, lettings of over 50,000 sq. ft. remain relatively infrequent and c. 50% of take-up continues to comprise lettings of less than 20,000 sq. ft.. In the nine months to 30 September 2016, 46% of take-up was by Irish companies, 32% by US and 13% by UK (source: CBRE).While we understand that there has been an increase in enquiries regarding regulatory approval to operate in Ireland from financial and professional services firms following the UK referendum, we have yet to see any meaningful "Brexit" enquiries in the office market. We believe there are a number of entities (some with and some without an existing presence in Dublin) carrying out scoping exercises to assess the viability of moving operations to Dublin but these appear to be at an early stage.Office development pipeline While a handful of refurbishment projects were delivered in Dublin in 2015, 2016 has marked the delivery of the first new office buildings to the Dublin market in over five years. In total, 1.1m sq. ft. of new office space is expected to be delivered during 2016 and 1.8m sq. ft. in 2017, 62% of which is already pre-let or reserved (source: Company). Currently we expect around 1.7m sq. ft. will be delivered in 2018 and 2.7m sq. ft. in 2019, meaning a total of 7.5m sq. ft. gross of new space will be delivered between 2015 and 2019 down from our estimate of 8.5m sq. ft. as at March 2016. 7.5m sq. ft. of gross additions to the stock represents c.6.5m sq. ft. of net new space (as a result of demolition to facilitate new development) and would represent an increase in the total stock figure of c.16% vs an increase in stock of 98% from 1993 - 2002 and 51% in 2003 - 2011 (source: Goodbody). Availability of speculative development funding remains scarce which has resulted in the owners of key development sites in the CBD seeking pre-lets before commencing development. Key pre-lets in the year to date include Grant Thornton (107,000 sq. ft.) and Amazon (170,000 sq. ft.), both achieving rents in excess of €50.00psf and term to break in excess of 12 years.

Residential sector While delivery of housing remains below the annual demand of c. 30,000 units (source: Goodbody), the sector is starting to show tentative signs of moving in the right direction: in the year to August 2016 national completions rose 16.8% y-o-y to c. 14,000 (but Dublin remained relatively stable at c. 3,700) (source: Department of Environment). Commencements are also rising: up 34% nationally and 7% in Dublin y-o-y to August 2016 (source: CSO). Additionally, mortgage data continues to improve (albeit from a low base) with the Banking & Payments Federation Ireland ("BPFI") reporting that approvals for the nine months to end September 2016 were 20% higher than the same period last year. The Government's Action Plan for Housing and Homelessness and "help to buy" initiative for first time buyers announced in the October Budget are targeted at addressing the sub-par housing supply but the target of 25,000 units per annum (between 2017 - 2021) is unlikely to be reached in the near term unless commencements dramatically increase from current levels. As a consequence of the low levels of delivery, there is continued price growth: as at August 2016, property prices in Ireland rose 7.2% y-o-y and 4.5% y-o-y in Dublin (source: CSO) and Davy expect national house price inflation of 7% in 2016 and 2017, 6% in 2018 and 5% thereafter. The relative lack of supply and Central Bank lending restrictions are resulting in continued residential rental growth with Dublin rents up 9.0% y-on-y in Q2 2016, reaching levels 3.9% higher than the previous peak in Q4 2007 (source: Residential Tenancies Board).

Business Review

Acquisitions and disposals The acquisition of Blocks 1, 2 & 5 Clanwilliam Court, Dublin 2, for c. €51m (€544 per sq. ft.) was announced in June 2016 and completed in July. Blocks 1, 2 & 5 are three 1970s office buildings totalling 93,700 sq. ft. arranged over five to six floors above a double basement with 220 underground car parking spaces. The buildings occupy a prominent position on the corner of Mount Street Lower and Clanwilliam Place in Dublin's central business district, a short walk from Merrion Square and Grand Canal Dock railway station. Following the acquisition of Marine House in March 2016 for €26.5m (€640 per sq. ft.), Hibernia now owns four contiguous blocks (totalling over 134,000 sq. ft. of office accommodation and 300 car parking spaces) of the seven blocks that comprise Clanwilliam Court (six offices, one residential) with potential for substantial redevelopment in the longer term (see further details below).

Portfolio overview

As at 30 September 2016 the property portfolio consisted of 28 investment properties valued at €1,032m, which can be categorised as follows:

1. Includes capex in acquisition costs and assumes 100% of South Dock House held for rent.

2. 1 Cumberland Place now in Traditional Core but value of site at the front is in Dublin CBD Office Development/ Refurbishment

3. South Docks excludes the value of space occupied by Hibernia

4. Excludes Harcourt Square as this is valued by CBRE on a residual/ development appraisal basis

5. Excludes all Dublin CBD Office Development/Refurbishment

6. Includes FBD surrender income top-up

The "in-place" office element of our portfolio had the following statistics at 30 September 2016:

We are working to extend unexpired lease terms and income security in the portfolio. The completion and letting of 1 Cumberland Place (formerly known as Cumberland House), One Dockland Central and SOBO Works, all of which are fully let and mostly on 20+ year leases with breaks in excess of 10 years, has significantly increased the WAULTs to break and expiry of the "in-place" office portfolio. We expect this trend to continue as we let up our three committed development schemes. The remaining "in-place" portfolio is reversionary with average contracted rents of €35psf compared to ERVs averaging €45psf and an average period to the earlier of rent review or expiry of 2.1 years giving potential for further uplifts to contracted rents.

The "in-place" office portfolio occupancy level at 30 September 2016 was 94%, approximately the same as at 31 March 2016, as new lettings, in particular in the completed developments, were balanced by the acquisition of substantial vacant space in Blocks 1 & 2 Clanwilliam Court. 

Developments and refurbishments

At 30 September 2016, the Group had committed schemes under way at three properties which will deliver 230,000 sq. ft. of high quality new office space in the next 20 months. A further three schemes completed in the period.

With the acquisition of Blocks 1, 2 & 5 Clanwilliam Court, the Group has further added to its longer term pipeline of developments: this now totals seven schemes if Clanwilliam Court is treated separately from the adjoining Marine House (up from six in March 2016), which, if undertaken would deliver an estimated 399,000 sq. ft. of high quality office space when fully completed.

Schemes completed The refurbishment of One Dockland Central was successfully completed on budget in May 2016, delivering a profit on cost of over 30%. Approximately half of the 57,700 sq. ft. refurbished was pre-let to HubSpot in November 2015 and the remaining space was let to ComReg in July 2016.

SOBO Works (formerly known as the Observatory Live/Work units) was converted to c. 9,600 sq. ft. of office accommodation and 1,700 sq. ft. of retail with the works completing in April 2016. At completion the project had delivered a profit on cost in excess of 50%. All the space was pre-let to Iconic Offices, a serviced office provider, at a rent of €0.4m per annum and the tenant is now in occupation.

Cumberland Place was completed in September 2016 and generated a profit on cost of 59% at completion (71% including current value of front site). 96,000 sq. ft. was pre-let to Twitter, who took occupation at completion, and the remaining 33,000 sq. ft. was let to Mobile Travel Technologies ("MTT") in September on a lease which commenced in November.

Committed development and refurbishment schemes

The repositioning of Guild House / Two Dockland Central is due to commence shortly, with works expected to be completed in late 2017. These will be similar to the refurbishment successfully completed in the adjoining One Dockland Central earlier this year. All of the tenants will vacate when their leases expire in March 2017 (with the exception of BNY Mellon, who hold a long term lease and intend to remain in occupation): we are in discussions with some tenants regarding re-occupation after the works are completed, together with one third party (see further details below under Asset Management).

Construction work at Windmill Lane ("1WML") continues to make good progress: the office structure has now reached full height and the glazing is being installed. The building envelope is expected to be completed before Christmas and the project remains on schedule for completion in late 2017. The formal marketing campaign for 1WML and 1 Sir John Rogerson's Quay ("1SJRQ") commenced in the middle of this year and discussions are underway with a number of potential tenants regarding 1WML.

At 1SJRQ, the foundations are complete and work on the structure is expected to begin shortly. The scheme remains on track to complete in mid-2018.

Please see further details on the development schemes below:

1. Per CBRE valuation at 30 September 2016

2. 58k sq. ft. refurbished out of total area of 74k sq. ft.

3. €7.9m net of dilapidation charge received

4. Est. total cost psf is net of dilapidations

5. Excl. additional basement areas (7.5k sq. ft.) and potential new block (c.50k sq. ft.) but incl. new reception (1k sq. ft.)

6. No cost attributable to basement area

7. Office only

8. Including potential 50k sq. ft. front site profit on cost is 71%

9. €38.2m net of dilapidation received

10. 57k sq. ft. is committed refurbishment of entire €73k sq. ft.

11. €10.4m net of dilapidations received

12. Represents 50% interest; includes extensions to 4th & 5th floors (2.3k sq. ft.) planning granted in May 16

13. Commercial and residential

14. Excl. c.1k sq. ft. of basement office and amenity

15. €91.4m net of dilapidations received

16. NIA is Net internal area

Longer term development pipeline Blocks 1, 2 & 5 Clanwilliam Court have been added to the longer term pipeline following their acquisition in July. All of the leases in the three blocks expire before the end of 2021 and there is potential for repositioning via refurbishment and / or expansion or full redevelopment either with or without the adjoining Marine House, where all leases expire at a similar time.

At Harcourt Square, we received planning permission for Phase 2 of the redevelopment in June 2016: combined with the planning permission already received for Phase 1, Hibernia now has full planning permission for a development of up to 276,500 sq. ft. of office and ancillary accommodation on the 1.9-acre site. The four leases to the Office of Public Works ("OPW") have either expired or are due to expire by the end of 2016, and we are seeking vacant possession for redevelopment. The OPW has applied to the Irish Circuit Court seeking statutory extension of the leases, which we will defend: the case is expected to be heard in early 2017. 

In the Hanover Building, we expect to extend the lease of BNY Mellon (who had exercised a break option to vacate in December 2016) to March 2017 while we assess our options to improve the building. At Cumberland, we have received preliminary planning approval from Dublin City Council for a new office block of c.50,000 sq.ft. at the front of the site. And at Gateway we continue to work on plans for the 14-acre site's future redevelopment.

Please see further details on the development pipeline below:

Asset management

Since 31 March 2016 we have made further progress on lettings and rent reviews which together have added €5.2m to contracted rents.

Summary of letting activity in the period

· Offices: Five new lettings of 91,000 sq. ft. and one rent review / lease extension generating €5.1m of incremental new annual rent. The weighted average periods to break and lease expiry for the new leases were 9 years and 20 years, respectively.

· Residential: Letting activity generated incremental new net annual rent of €44,000 during the period (45 apartments). Average rents achieved for lettings of two-bed apartments since 31 March were €1,750 per month vs average contracted 2 bed rents for the portfolio of €1,700 per month.

Letting activity post period end As set out below, we are in discussions with potential tenants in a number of buildings where we have vacant space.Key asset management highlightsSee also 'Developments and Refurbishments' section above for further details. Building management In July we announced the establishment of a building management department to take control of the management of Hibernia's multi-let buildings, develop closer relationships with tenants and improve the quality of service. Upon completion in September, Cumberland Place became the first building to come under the direct control of the department and five more buildings totalling 420,000 sq. ft. will come under direct management in January 2017. We expect all multi-let buildings to be under direct management by mid-2017. The department will be run to maximise the quality of service offered and once fully operational is expected to be cost neutral for Hibernia. Central Quay, South Docks We are in discussions with potential tenants regarding the vacant third floor (11,000 sq. ft.). Inspections are ongoing regarding the remaining 7,000 sq. ft. of available space on the ground floor in the building. Blocks 1, 2 & 5 Clanwilliam Court, D2 The buildings, which adjoin Marine House, were acquired in July 2016 and total 93,700 sq. ft. of office accommodation and 220 car parking spaces (which combined with Marine House total 134,700 sq. ft. of offices and 301 car parking spaces). Blocks 1, 2 & 5 are 76% let to a range of occupiers, including the ESB, Bord Bia (the Irish Food Board) and Hines Real Estate Ireland, generating annual rent of €2.9m per annum (an average of €34psf), a net initial yield of 5.0%. We are in discussions with a potential tenant for 90% of the 22,700 sq. ft of vacant space. Cumberland Place, D2 The redevelopment works completed in September 2016 and Twitter took occupation of the c. 96,000 sq. ft. it had pre-let. The remaining 33,000 sq. ft. and 10 parking spaces were let to Mobile Travel Technologies ("MTT") in September on a lease which commenced in November and has a five month rent free period. The contracted rent of the building is now c. €7m with weighted average unexpired lease terms of c. 12 years to break and 21 years to expiry. Guild House / Two Dockland Central, IFSC We decided to reposition the building to the same standard as that recently completed in One Dockland Central earlier in 2016. All tenants will vacate the building when their leases expire in Q1 2017 (excluding BNY Mellon who hold a long lease). We are in discussions with some of the existing tenants regarding re-occupation post completion and in addition are in active discussions with a third party regarding a pre-lease of part of the refurbished floor space.

One Dockland Central, IFSC Of the 57,700 sq. ft. refurbished, 27,500 sq. ft. (two floors) was pre-let to Hubspot in November 2015 on a 20-year lease at a rent of €1.3m per annum (€45psf) after a six month rent free period from commencement: the lease commenced in February 2016. In July 2016 the remaining two floors were let to ComReg on a 20-year lease at a rent of €1.6m per annum (€50psf) after a four month rent free period. The average weighted average unexpired lease terms in the building are now 10 years to break and 17 years to expiry.Other completed assets The remaining completed properties in the portfolio are close to full occupation. The average period to rent review or lease expiry for the "in-place" office portfolio (not including recently completed developments) is 2.1 years: the team is assessing options to maximise returns from the up-coming lease events and continues to carefully monitor the letting markets and work closely with our tenants. Sale of non-core assets The sale of the non-core assets from the Dorville portfolio was almost complete at 30 September 2016 with only four assets remaining with a carrying value of €0.8m (31 March 2016: €3.9m): the net profit on disposals in the period since 31 March 2016 was €0.1m.

Financial results and position

* Excluding one-off €4.9m surrender premium received

The key drivers of EPRA NAV per share, which increased 3.8 cent from 31 March 2016 were:

- 3.5 cent per share from the revaluation of the property portfolio, including 1.9 cent per share in relation to development properties

- 1.2 cent per share from EPRA earnings for the period

- Payment of the final dividend, which decreased NAV by 0.8 cent per share

- Other movements decreased NAV by 0.1 cent per share

EPRA earnings for the period were €8.0m, up 53.8% compared to the same period last year, excluding the €4.9m one-off gain relating to the surrender premium received from FBD in the prior year. The key driver of the increase was the 35.5% increase in rental income (excluding the surrender premium) due to new lettings and further acquisitions made in the past 12 months. There were no one-off gains during the period (30 September 2015: €4.9m). 

Operating expenses (excluding performance related payments) were €5.6m in line with the same period last year (30 September 2015: €5.6m)

Net profit for the period was €32.3m, a decrease of 56.2% over the same period last year (53.1% decrease excluding the surrender premium in the prior year) due to lower revaluation gains on investment properties as growth in capital values in the market have moderated and after a less active six-month period for the Group.

Financing and hedging As at 30 September 2016, the Group's net debt was €110.5m, a loan to value ratio (LTV) of 10.7%, having increased from a net debt position of €52.9m (LTV of 5.7%) at 31 March 2016 due to capital expenditure on acquisitions and developments.

The Group has two facilities in place, a €400m revolving credit facility ("RCF") which matures in November 2020, and a non-recourse, three-year debt facility with Deutsche Bank of €44.2m (Hibernia's share €22.1m). If both facilities were fully drawn at 30 September 2016 this would have resulted in an LTV of 31.8%. Given the nature of our portfolio and the development exposure within it, we expect the through-cycle gearing to be in the range of 20-30% LTV.

The Group has a policy of fixing or hedging the interest rate risk on the majority of its drawn debt. Currently it has interest rate caps and swaptions with 1% strike rates in place covering €100m of the RCF. The interest rate exposure of the Windmill Lane facility has been hedged using an interest rate cap with a 1% strike rate. 

Approval as Alternative Investment Fund Manager ("AIFM")

The Company received authorisation from the Central Bank of Ireland (the "Central Bank") as an internally managed Alternative Investment Fund ("AIF") in July 2016. Following the internalisation of WK Nowlan REIT Management Limited (the "Investment Manager") in November 2015, the Investment Manager remained authorised as the Alternative Investment Fund Manager ("AIFM") to Hibernia pending authorisation by the Central Bank of Hibernia as an internally managed AIF. Concurrent with the authorisation of Hibernia, and as requested by Hibernia, the Central Bank withdrew the authorisation of the Investment Manager.

DividendThe Board has declared an interim dividend of 0.75 cent per share (2015: 0.7 cent), which represents 50% of the total dividends paid in respect of the prior financial year, consistent with its policy of paying an interim dividend totaling 30-50% of the total regular dividends paid in respect of the prior year. All of this interim dividend will be a Property Income Distribution ("PID") in respect of the Group's tax exempt property business. 

The dividend will be paid on 26 January 2017 to shareholders on the share register as at 6 January 2017.

Hibernia introduced a Dividend Reinvestment Plan ("DRIP") in 2015: this allows shareholders to instruct Capita, the Company's registrar, to reinvest dividend payments by the purchase of shares in the Company. The terms and conditions of the DRIP and information on how to apply are available on the Group's website.

Selected portfolio information

1. Top 10 "in place" office occupiers by contracted rent and % of contracted in place office rent roll

2. "In place" office contracted rent by business sector

3. Portfolio by location

150% of 1WML included

2 Cumberland Phase 1 (i.e. completed refurbishment) included in Traditional Core

3CBD Office Development/Refurbishment, Residential, Industrial. Note that Cumberland Phase 2 (i.e. potential additional 50k sq. ft. front site) is included in CBD Office Development/Refurbishment

Principal Risks and Uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance and could cause actual results to differ materially from expected and historical results for the remaining six months of the financial year. A description of these risks and the steps which the Group has taken to manage these risks is set out below.

Directors' Responsibilities Statement

Each of the Directors, whose names appear on page 66 of this report confirm to the best of their knowledge that the interim condensed consolidated financial statements in the Half Yearly Financial Report have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union ("EU") and the interim management report[3] herein contains a fair review of the information required by Disclosure and Transparency Rules of the Central Bank of Ireland, namely:

- Regulation 8(2) of the Transparency Directive (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the period from 1 April 2016 to 30 September 2016 and their impact on the half yearly financial report, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

- Regulation 8(3) of the Transparency Directive (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place during the period from 1 April 2016 to 30 September 2016 and that have materially affected the financial position or performance during the period.

Signed on behalf of the Board

Kevin Nowlan Thomas Edwards-Moss

Chief Executive Officer Chief Financial Officer

9 November 2016

INDEPENDENT REVIEW REPORT TO HIBERNIA REIT PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2016, which comprises the group condensed consolidated statement of comprehensive income, the group condensed consolidated statement of financial position, the group condensed consolidated statement of cash flows, the group condensed consolidated statement of changes in equity and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

As disclosed in the Basis of preparation, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in the half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in Ireland and the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

INDEPENDENT REVIEW REPORT TO HIBERNIA REIT PLC

(Continued)

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union, the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

Deloitte

Chartered Accountants and Statutory Audit Firm

Dublin

Date: 9 November 2016

Group Condensed Consolidated Statement of Comprehensive Income

The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.

Group Condensed Consolidated statement of comprehensive income

The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.

Group Condensed Consolidated Statement of Financial Position

The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.

Group Condensed Consolidated Statement of Changes in Equity

The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.

Group Condensed Consolidated Statement of Cash flows

For the six-month period 1 April 2016 to 30 September 2016

The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.

Notes Forming Part of the Half Yearly Financial Report

Hibernia REIT plc, the "Company", together with its subsidiaries and associated undertakings as detailed in Note 27 (the "Group"), is engaged in property investment (primarily commercial) in the Irish (primarily Dublin) market with a view to maximising its shareholders' returns.

The Company is a public limited company and is incorporated and domiciled in Ireland. The address of the Company's registered office is South Dock House, Hanover Quay, Dublin, D02 XW94, Ireland. The Company was incorporated on 13 August 2013 and registered as a public limited company on 8 November 2013. The registered number of the Company is 531267.

The Ordinary Shares of the Company are listed on the primary listing segment of the Official List of the Irish Stock Exchange (the ''Irish Official List'') and the premium listing segment of the Official List of the UK Listing Authority (the ''UK Official List'' and, together with the Irish Official List, the ''Official Lists'') and are traded on the regulated markets for listed securities of the Irish Stock Exchange and the London Stock Exchange plc (the ''London Stock Exchange'').

a. Statement of compliance

The annual financial statements of Hibernia REIT plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, which comprise standards and interpretations approved by the International Accounting Standards Board (IASB). IFRS as adopted by the EU differ in certain respects from IFRS as issued by the IASB. This interim financial report has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by the EU.

The interim figures for the six months ended 30 September 2016 are unaudited but have been reviewed by the independent auditor whose report is set out on pages 22 to 23 of this report. The summary financial statements for the year ended 31 March 2016 that are presented in the condensed consolidated interim financial statements represent an abbreviated version of the full accounts for that year on which the independent auditor, Deloitte, issued an unqualified audit report and which are not annexed to these interim financial statements. The half yearly financial statements herein are non-statutory financial statements for the purposes of the Companies Act 2014 and in compliance with Section 340(4) of that Act.

b. Functional and presentation currency

These condensed consolidated financial statements are presented in Euro, which is the Company's functional currency and the Group's presentation currency.

c. Basis of accounting

The condensed consolidated financial statements have been prepared on a going concern basis, in accordance with IFRS and the IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union and the Companies Act 2014. The Group financial statements therefore comply with Article 4 of the EU IAS Regulation.

The condensed consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of investment properties, owner occupied buildings and financial instruments that are measured at fair value at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

d. Assessment of going concern

The half yearly financial report has been prepared on a going concern basis. The Directors have performed an assessment of going concern for a minimum period of 12 months from the date of this statement and are satisfied that the Group is appropriately capitalised. The Group has a positive cash balance as at 30 September 2016 of €17m (31 March 2016: €23m), is generating positive operating cash‑flows and, as discussed in Note 22, has in place a revolving credit facility with an undrawn balance of €274m at 30 September 2016 (31 March 2016: €325m). The Group has assessed its liquidity position and there are no reasons to expect that the Group will not be able to meet its liabilities as they fall due for the foreseeable future.

e. Basis of consolidation

The financial statements incorporate the condensed consolidated financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is assessed based on the Company's:

- power over the investee;

- exposure to variable return from its involvement with the investee; and

- ability to use its powers to affect returns.

When the Company has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.

 The results of subsidiaries and joint arrangements acquired or disposed of during the financial year are included from the effective date of acquisition or to the effective date of disposal. The accounting policies of all consolidated entities are consistent with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

f. Use of judgements and estimates

In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The preparation of the financial statements may require Management to exercise judgement in applying the Group's accounting policies. The following are the significant judgements: 

Valuation of investment properties 

The Group's investment properties are held at fair value and were valued at 30 September 2016 by the external valuer, CBRE Limited, a firm employing qualified valuers in accordance with the Royal Institution of Chartered Surveyors Valuation - Standards (January 2015) (the "Red Book"). Further information on the valuations and the sensitivities is given in Note 14. 

The Board conducts a detailed review of each property valuation to ensure that appropriate assumptions have been applied. Property valuations are complex and involve data which is not publically available and a degree of judgement. The valuation is based upon the key assumptions of estimated rental values and market based yields. The approach to developments and refurbishments is on a residual basis and factors such as the assumed timescale, the assumed future development cost and an appropriate finance and/or discount rate are used to determine the property value together with market evidence and recent comparable properties where appropriate. In determining fair value, the valuers make reference to market evidence and recent transaction prices for similar properties. 

The Directors must be satisfied that the valuation of the Group's properties is appropriate for inclusion in the accounts. The fair value of the Group's properties is based on the valuation provided by CBRE. This valuation is based on future cashflows from rental income both for the current lease period and future estimated rental values.

Significant judgements and key estimates arising in relation to the Group's investment properties:

- Block 3 Wyckham Point: This property is held for long-term property rental and was developed on this basis. The units comprising this property were completed on a phased basis by the Group in mid-2015. VAT was payable both on the acquisition and on the construction costs which were treated as unrecoverable and recognised as part of the costs of the project. If this property is sold within five years of completion, i.e. before mid-2020, the Group would have to charge VAT on the sale but would be entitled to a recovery of the VAT paid on construction and acquisition costs on an apportioned basis. As this property is not intended to be sold within the five-year period, in the opinion of the Directors no amendment to the valuer's valuation in respect of this is necessary.

- Where properties have been significantly developed or redeveloped by the Group, if the asset was to be sold within three years of completion, the Group would be liable to tax on profits arising on the disposal under S.705G Taxes Consolidation Act 1997. No provision is currently being made for potential deferred tax on revaluations on these properties that have been significantly developed, since in the judgement of the Directors, these assets are held for longer term rental income and capital appreciation and therefore they will not be sold within the three-year period.

- All investment properties are valued in accordance with their current use, which is also the highest and best use, with the exception of Harcourt Square where, in accordance with IFRS 13:27, the valuation takes into account its potential as a development property which reflects the asset in its highest and best use. It is the Directors' intention to pursue the redevelopment of this property.

- In accordance with the Group's policy on lease incentives, the valuation provided by CBRE is adjusted by the fair value of the rental income accruals ensuing from the recognition of these incentives. The total reduction in the external valuer's investment property valuation in respect of these adjustments was €3.2m (31 March 2016: €2.6m).

Performance related payments

The Directors have considered the provision of amounts payable for performance related payments for the period. Apart from €0.7m which has been provided in relation to top-up fees and amounts relating to joint venture management fees earned, there is no provision made in these financial statements for the period ended 30 September 2016.

No further issues were considered or adjustments required for the period ended 30 September 2016.

The Group has not adopted any new or amended accounting pronouncements which have impacted on the half yearly report.

Adoption of new standards

The Directors do not expect that the adoption of the new and revised IFRSs that have been issued but are not yet effective will have a material impact on the financial statements of the Group in future periods. Two new standards will have some impact, the adoption of IFRS 9 will impact both the measurement and disclosures of financial instruments and the adoption IFRS 15 may have an impact on revenue recognition and related disclosures. The impact of these has not been fully assessed as yet and it is therefore not practical to discuss the potential impacts in detail at this time.

These condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group's Annual Report in respect of the year ended 31 March 2016. The accounting policies and methods of computation employed in the preparation of the condensed consolidated financial statements are consistent with those employed in the preparation of the most recent annual consolidated financial statements in respect of the year ended 31 March 2016.

The Group is organised into six business segments, against which the Group reports its segmental information, being "Office assets", "Industrial assets", "Residential assets", "Development assets", "Other Assets" (non-core assets) and "Central assets and costs". All of the Group's operations are in the Republic of Ireland. Operating segments are reported in a manner consistent with the reporting to the Board of Directors of the Company which is the chief decision maker of the Group.

Central assets include cash and cash equivalents, tax refundable and administration expenses paid in advance. In addition, cash received in advance in relation to rental receipts on properties and rental income accrued have been allocated from receivables and cash and cash equivalents to the appropriate segment.

The Group's key measure of underlying performance of a segment is total income after revaluation gains and losses which comprises revenue (rental and interest income), property outgoings, revaluation of investment properties and other gains and losses. Total income after revaluation gains and losses includes rental income which is used as the basis to report key measures such as EPRA Net Initial Yield ("NIY") and EPRA "Topped‑Up" NIY, which measure the cash passing rent returns on market value of investment properties before and after an adjustment for the expiration of rent free period or other lease incentives, respectively.

Group Consolidated Segment Analysis 

For the period 1 April 2016 to 30 September 2016

Unaudited

Group Consolidated Segment Analysis 

For the period 1 April 2015 to 30 September 2015

Unaudited

Rental income arises from the Group's investment property. Rental income in the period includes €0.9m in relation to the spreading of lease incentives (30 September 2015: €1.1m).

Other fees and income relates mainly to the fees earned in relation to the management of the Windmill Lane joint arrangement.

In November 2015, the Investment Manager, WK Nowlan REIT Management Limited was acquired by the Company otherwise referred to as "internalisation". Deferred remuneration relates to fees paid, during this internalisation, to vendors who continue to provide services to the Company. It is therefore recognised in line with the provision of those services (see Note 5 of the Annual report 2016).

As at 30 September 2016 the Group had the following share based payment arrangements:

a. Performance related payments

As part of the arrangements for the internalisation of the Investment Manager in 2015, it was agreed that future performance fees and other payments due under the terms of the Investment Management Agreement ("IMA"), would be made in shares of the Company until the expiration of the agreement in November 2018. The calculation of these amounts is determined based on the Net Asset Value of the Group at the financial year end and references a share price of the average closing price on the Irish Stock Exchange for the preceding 20 business days. The amount of this award is fixed on determination of the NAV and is calculated under a formula set out in the Share Purchase Agreement ("SPA") which was approved by the Company's shareholders in October 2015. Once the NAV is determined, the amount of the award is fixed and the Directors have determined that the grant date for the share based payment is the date on which the calculation is fixed, i.e. 31 March each year, as at this date. The Directors have estimated the amount of fees that may be payable under this arrangement for the six months to 30 September 2016 in preparing these condensed consolidated financial statements at €0.7m (30 September 2015: €nil).

Shares issued relating to performance related payments to vendors that remain obligated to perform future services for the Group are subject to lock-up provisions meaning they are restricted from being sold upon receipt, with one third of the shares being "unlocked" on each anniversary of issue date. All shares are beneficially owned by the recipients and all voting rights and rights to dividends accrue to them. The Directors considered the likelihood of the clawback provision being triggered on these shares, the difficulty in measuring this provision, and the likelihood that any discount to be applied would be material. They concluded that it was inappropriate to modify the fair value of the shares issued to reflect these restrictions and the shares issued would be valued without any discount to reflect these restrictions.

b. Employee long term incentive plan

Awards will be granted to employees of the Group under a remuneration plan which includes both cash elements and elements of long term incentive payments, which are share based (the "Performance Related Remuneration Scheme" or "PRR"). Until the expiry of the performance related payments referenced in part a) above in November 2018, the PRR will be funded entirely by deductions of up to 15% from any Performance Fees included in this payment. Shares awarded under the PRR are in the form of a contingent grant of Company shares which will issue at the time of vesting which occurs on the third anniversary of the start of the year to which they relate. The number of shares is calculated based on the average closing price for the 20 business days preceding the end of the relevant period. These shares are recorded at fair value on the contingent grant date, i.e. the 31 March of the year to which they are earned. The charge recognised in the condensed consolidated income statement for the period ended 30 September 2016 and 30 September 2015 is €nil.

Shares are forfeited should the person leave the Group prior to the vesting date unless subject to "good leaver" provisions. Any shares forfeited are transferable to the vendors. Therefore, there is no impact on fair value measurement in respect of these shares.

Share based payments made and provided during the period:

Six months ended 30 September 2016 (unaudited)

Shares issued during the period:

4,200,590 Ordinary Shares of €0.10 were issued during the period in settlement of performance related fees at a fair value of €1.302 on 31 March 2016, the grant date, giving a total recorded of €5.5m in settlement of fees due.

Year ended 31 March 2016 (audited)

Shares issued during the period:

Under the terms of the internalisation of the investment manager share purchase agreement, a part of the payment was made in shares of the Company. The issue price of €1.17605 per share was determined by reference to the average share price for twenty days prior to 1 April 2015. 10.9m shares were issued on 10 November 2015 when the price was €1.318. The fair value of these shares is set out below.

Shares issued in the transactions comprising "Internalisation" of the Investment Manager

The effective interest expense on borrowings arises as a result of the recognition of interest expense, commitment fees, arrangement fees and the amortisation of the time value of hedging costs on the Group's revolving credit facility and on the debt facility relating to the Windmill Lane joint operation.