01st November (Issue 70)
Welcome to the Origin Capital Weekly Irish Property Review. This update is designed to provide you with a full recap of the latest property news from the media over the last seven days.
LOAN / PORTFOLIO SALES
Project Tolka: NAMA is expected to commence the sale of Project Tolka within the next few weeks. The loan portfolio has a par value of c. €1bn and is secured by a number of commercial and leisure properties in Dublin. The assets in the portfolio include Burlington Plaza in Dublin 4, which has a reported value of up to €250m, and Belfield Office Park. The loans in the portfolio are connected to John Flynn, Paddy Kelly and the McCormack family. The Sunday Times, 30th October
Pepper Portfolio: Permanent TSB (PTSB) is reportedly close to acquiring c. €100m worth of performing mortgages from Pepper Asset Servicing. Pepper acquired the mortgages from GE Capital in 2012 as part of a c. €600m par value loan portfolio. GE Capital’s portfolio included c. 3,500 mortgages and the majority of the loans in the portfolio were non-performing at the time. Following the acquisition, Pepper has worked to restructure the loans in the portfolio. Pepper reportedly paid c. 40 cent in the Euro for the loans, with Goldman Sachs providing the majority of the funding. The Irish Times, 27th October
AIB Portfolio: The Sunday Business Post reports that AIB has hired A&L Goodbody (A&LG) to perfect the Bank’s security over a portfolio of distressed loans, as it prepares to sell them in early 2017. According to market sources, the loan portfolio will be secured by c. 1,500 investment properties and will have a par value of c. €400m. A&LG has already contacted each of the borrowers in the portfolio, seeking collateral and security documents. Grant Thornton is understood to be supporting A&LG in the process. The Sunday Business Post, 30th October
Danske Portfolio: Danske Bank has confirmed that it sold hundreds of residential mortgages and personal loans to Cerberus Capital Management for c. €250m in October 2016. The sale represents the final stage in Danske’s withdrawal from retail banking operations in Ireland, after it closed all of its branches and customer accounts in 2014. The Sunday Times, 30th October
Project Madrid: According to The Sunday Business Post, the Doyle family has made multiple bids for Project Madrid, a NAMA loan portfolio secured on properties in Dublin city centre. The properties were previously acquired by Bernard McNamara. One of the bids is for the entire portfolio and has been made under the investment vehicle Crownway. Separately, the Doyle Collection hotel group, which owns the Westbury Hotel, has bid for four of the 13 properties in the portfolio which are adjacent to the hotel. The Sunday Business Post, 30th October
RETAIL
35 Henry Street: The Friends First Irish Commercial Property Fund has purchased a 3 store on 35 Henry Street in Dublin 1 for c. €9.2m, c. €1m above the €8.25m guide price quoted by Savills. The mobile phone operator 3 is paying a rent of c. €425k p.a., providing Friends First with a net initial yield of c. 4.5%. There are over 15 years left to run on the lease, which includes upwards only rent reviews. The Irish Times, 26th October
Jervis Shopping Centre: The UK’s Arcadia Group has availed of a 20-year break option on its five retail units in Dublin’s Jervis Shopping Centre to allow it to change the composition of its stores. Following negotiations, Arcadia will replace its current lineup of Wallace, Miss Selfridge, Burton, Topman and Topshop with a new Topshop – Topman store. Arcadia had been paying a rent of c. €2m p.a. for the five shops, which had a floor area of c. 30,000 sq. ft. Arcadia is now expected to pay a rent of c. €1.3m p.a. for the new 20,000 sq. ft. store, which should be open by next summer. It is understood that Savills we soon begin seeking tenants for two 5,000 sq. ft. units in the centre, for which the combined projected rental income is c. €1m p.a. The Irish Times, 26th October
OFFICE
Central Bank HQ: The Sunday Times reports that Hines Real Estate is expected to be chosen as the preferred bidder for the Central Bank’s HQ on Dame Street in Dublin city centre. Bids for the property, which was guiding €65m, were submitted last weekend and a decision on the preferred bidder is expected this week. According to market sources, the highest bids were by Hines and Hibernia REIT. The Sunday Times, 30th October
East Point Business Park: JLL is guiding €12.5m for Block P2 of East Point Business Park in Dublin 3. The four-storey, 50,000 sq. ft. property includes 71 car spaces and is let to Virgin Media Ireland, with the lease guaranteed by UPC Broadband. The lease for the property runs for 25-years from December 2000, although there is a break option at the end of 2020. The current rental income of c. €647k p.a. reflects a rent of c. €12 psf for the office space and c. €700 per car space. There is significant potential to increase the rental income of the property at the next rent review, as similar properties in the business park are seeking rents of €20 – €25 psf for vacant floor space and €1,350 per car space. The Irish Times, 26th October
Burlington Road: Amazon has completed legal contracts to rent a 172,000 sq. ft. office block under construction on Burlington Road in Dublin 4. Amazon will pay a blended rent of c. €50 psf for the block, under a lease which contains a break option in year 13. The site on which the block is being developed was acquired in 2014 by Johnny Ronan, in a joint venture with U+I and Colony Capital. Once the development is complete next summer, the German company Union Investment Real Estate will assume ownership of the block. The Irish Times, 26th October
Adelphi Plaza: Bank of Ireland Payment Acceptance (BoIPA) will relocate c. 100 employees from East Point Business Park in Dublin 3 to Adelphi Plaza on George’s Street Upper in Dún Laoghaire. BoIPA will occupy the entire of the 13,038 sq. ft. second floor of Adelphi Plaza, while also renting 15 car spaces. BoIPA’s lease will run for 20 years and they will pay a rent of c. €25 psf. The five-storey, 62,900 sq. ft. property was acquired in 2013 by Solvalla Properties Ltd for c. €3.65m. Since acquiring the property, Solvalla has undertaken a floor-by-floor refurbishment of the property. The Irish Times, 26th October
HOTEL
Dublin Airport Hotel: The Dublin Airport Authority has retained Savills Hotels & Leisure to identify a developer for a new four-star, 402-bedroom hotel which will be built alongside Dublin Airport’s Terminal Two. Savills is expecting significant interest for the project, which will be completed under a Finance, Build Operate and Transfer (FBOT) model. The hotel will be part of a new 11-storey, c. 245,000 sq. ft. terminal-linked property. Construction is expected to commence in October 2017 and the hotel should be open by 2019. The Irish Times, 27th October
Dalata Hotel Cardiff: Dalata has paid c. €27m to acquire the freehold interest in its Clayton Hotel Cardiff in Wales. The four-star, 216-bedroom hotel was purchased in a transaction which will also see Dalata acquire Rush (Central) Limited. Based on current exchange rates, Davy research estimates that the acquisition will increase 2017 EBITDA by c. €1.7m. The Irish Times, 26th October
Griffin Group: The Griffin Group, which owns Hotel Kilkenny, the Ferrycarrig in Wexford town and Monart in Enniscorthy, has paid c. €26m to purchase its loans from Bain Capital. Bain acquired the loans in 2015 from Ulster Bank, under a company called Coney Investments. The loans had been performing when they were sold by Ulster Bank. The latest accounts for the Griffin Group show that the group had turnover of c. €20.7m and operating profit of c. €2.6m in 2015. The Sunday Business Post, 30th October
RESIDENTIAL / LAND
Shaw Court: Cushman & Wakefield is guiding in excess of €6.8m for 23 apartments off South Circular Road in Dublin city centre. Shaw Court consists of 14 one-bed and nine two-bed apartments, for which the rental income is c. €330k p.a. According to Cushman & Wakefield, the true rental value of the apartments is c. €495k p.a. Based on the guide price, the portfolio offers a net initial yield of 4.85%, while there is potential to increase the gross return to 7.28% by increasing the rental income to c. €495k p.a. The Irish Times, 26th October
Palmerstown Site: Receivers appointed by NAMA are to sell a 9.76-acre site in Palmerstown, Dublin 20, by way of licence agreement. Savills has been retained to identify the most suitable developer for the site, which has planning permission for 102 terraced and semi-detached houses. The sales process will include a published weighting system, upon which each bid will be assessed. The system will evaluate factors such as the price, the bidder’s ability to construct and their track record of completing similar projects. As a consequence of this sales process, no guide price is being quoted by Savills. However, The Irish Times estimates that the site could sell for €7m – €8m on the open market. According to David Browne of Savills, the gross development value of the site could exceed €35.55m. The Irish Times, 26th October
Q3 2016 Mortgage Drawdowns: The Q3 2016 report from the Banking & Payments Federation Ireland (BPFI) on mortgage drawdowns shows that there were 8,133 mortgages drawn down in Q3 2016, a 19.6% increase QoQ and a 13.7% increase YoY. On a value basis, there was c. €1.558bn of mortgages drawn down in Q3 2016, an increase of 21.1% QoQ and an increase of 16.7% YoY. BPFI Mortgage Drawdowns, Q3 2016
INDUSTRIAL / LOGISTICS
Prime Lettings: The UK health food retailer Holland & Barrett has agreed terms with Rohan Holdings to lease a c. 66,000 sq. ft. warehouse in Dublin Airport Logistics Park which should be completed by May 2017. Holland & Barrett will pay a rent of c. €9.55 psf for the warehouse, under a 25-year lease which will have a break option in year 15. The pharmaceutical company Uniphar is also believed to have agreed to a lease for a new c. 90,000 sq. ft. property near Baldonnel on similar terms. The Irish Times, 26th October
Tyrrelstown Site: CBRE is inviting offers of €5.25m for a 32.4-acre site in Tyrrelstown, Dublin 15. The site is zoned for high technology development and is available to purchase in one or more lots. According to CBRE, the site can facilitate a substantial level of accommodation for high-tech manufacturing and logistics operators. The Irish Times, 26th October
OTHER
Offaly Airport: The investors behind the plans for a new airport in Offaly could be announced within the next four weeks. Midlands Airport Developments is looking to build an airport in Offaly between Horseleap and Tubber, and is currently in negotiations with landowners in the area. The cost of the airport may reach €500m. The project has been categorised as critical infrastructure, which allows the planning application to go straight to An Bord Pleanála. The Irish Times, 28th October
Commercial Property Market Performance: The IPD / SCSI index shows that Irish commercial property assets generated returns of 2.1% in Q3 2016, bringing the YTD returns up to 8.5%. The best performing sectors were offices in Dublin 1, 3 and 7 and industrials in south-west Dublin, which achieved returns of 3.2% in Q3 2016. The industrial market has been the best performing sector for the 12-month period ending September 2016, achieving total returns of 20.6%. The Sunday Business Post, 30th October
Grange Clinic: Savills is guiding €3m for the Grange Clinic on the Grange Road in Donaghmede in Dublin 13. The 8,581 sq. ft. medical centre was developed in 2008 and generates rental income of c. €242k p.a. from multiple tenants. Boots is the single-highest paying tenant, paying c. €55k p.a. to occupy a 1,345 sq. ft. ground floor pharmacy unit. Other services in the clinic include two group GP practices, a physiotherapist, a chiropodist and an acupuncturist. The Irish Times, 26th October
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