25 Jun 2019

HBRN: Buyback reaches the 40% mark

In a statement released this morning, Hibernia REIT (HBRN) says that it repurchased 140,000 shares at a VWAP of €1.4202 yesterday pursuant to the share buyback programme announced on April 1. 


This brings cumulative repurchases under the programme above the €10m (40%) mark. To date, HBRN has repurchased 7.3m shares at a VWAP of €1.391, which is 20% below the end-March 2019 EPRA NAV per share of €1.733, so providing further helpful accretion (note that the €25m which HBRN has committed to the programme came from a better-than-book-value disposal of a Dublin Docklands office building).


The sale of the office building brought in net proceeds of €35m, so HBRN will have to find a way to return the balance of €10m following the completion of the current buyback programme. To this end, the company has put forward a capital reorganisation resolution at next month’s AGM to enhance its flexibility for capital management via the mechanism of converting “a substantial amount” of its share premium account (which had a balance of €624.5m at end-March) into distributable reserves.


At yesterday’s closing share price of €1.408, a €10m special dividend would equate to a yield of 1.03%, whereas if the buyback was increased by €10m then management would be able to continue repurchasing shares at a 19% discount to the latest published NAV. 


Iran tensions push oil higher 

Brent matched last week's high at 65.80 $/b over the last 24 hours. Trump has said that the US will apply additional sanctions to Iran, but it not clear there is much left to apply additional sanctions to. Perhaps the focus will be on urging other countries to introduce sanctions? Though Trump decided to call off a retaliatory physical strike on Iran, there have been reports over the weekend it carried out a cyber-attack on Iranian weapon systems instead - Iran denied this. There was also a further attack on Saudi airport from Yemen.


This week's focus turns to the latest developments in the Middle East and the G20 meeting. Is the market over optimistic in its hope for progress on trade between the US and China? Can Brent break through moving average resistance around 67.50 to 68.50 $/b?


Trump takes aim at Fed again 

In yet another twitter rant, US President, Donald Trump poured more scorn on the Fed and Fed Chair, Jerome Powell for their refusal to reignite any of their monetary stimulus programmes. Mr. Trump tweeted that while he has the authority to fire the Fed Chair whenever he so desires, he currently has no plans to do so at this time. President Trump also said that US GDP growth could be “in the four’s or five’s” and that the DJIA could be “thousands of points higher” if the Fed would only start cutting rates.


Staying with all things Fed related, Dallas Fed President, Robert Kaplan voiced a less than hawkish tone yesterday when he said that: “It would be wise to take additional time and allow events to unfold as we consider whether it is appropriate to make changes to the stance of US monetary policy.” We have more Fedspeak due later today from Fed Chair Powell and a whole host of Fed members including SF President, John Williams and St. Louis President James Bullard.


US – China Trade

Senior Chinese and US trade officials have agreed to resume discussions to resolve their trade dispute, in a phone conversation on Monday ahead of the high-stakes talks between the two countries’ presidents in Japan this week. Chinese President Xi Jinping will travel to Japan on Thursday and will meet US President Donald Trump on the sidelines of the Group of 20 summit in Osaka, the first face-to-face meeting for the leaders since trade talks broke off in May. US officials have downplayed any expectations the market may have ahead of the crucial meeting “The purpose of the discussion is to rebalance the economic relations in a way that protects US economic prosperity, workers, and of course that also means the kinds of structural changes that would need to take place to protect intellectual property,”.


Economic Releases

13.45 US FOMC member Williams speaks
15.00 US CB Consumer Confidence
15.00 US New Home Sales
18.00 US Fed Chair Powell speaks