02nd May (Issue 94)

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.




AIB Non-Performing Mortgages: The Sunday Business Post reports that a plan is being finalised which could help tens of thousands of distressed mortgage holders remain in their homes, whilst also thwarting vulture funds from acquiring their debts. Under the plans, AIB would sell up to 2,000 properties and 3,000 mortgages to anti-repossession advocates, in a move that would allow the bank to offload its estimated €2.9bn non-performing mortgage book. AIB is believed to have selected the Irish Mortgage Holders Association, an advocacy group, as its partner in the project, although it is believed final contracts have yet to be signed. Under the scheme, the group would acquire 2,000 properties where the owner qualifies for mortgage-to-rent, and the Housing Finance Agency would support this element of the deal. Under phase two, the group would raise potentially hundreds of millions of Euro from international banks to acquire the debt on a further 3,000 distressed mortgages. The homeowner would then be entitled to buy back the house at an agreed rate over a period of time. The fund would acquire the properties and debts at the same discounted rate as vulture funds, however their focus would be to help borrowers remain in their homes through either mortgage-to-rent or a restructured mortgage arrangement. It is understood that the Government is highly supportive of the scheme, as it would stop thousands of mortgages being sold to vulture funds, and the scheme has also been designed to appease the ECB, which is pushing Irish banks to resolve their distressed mortgage books. The Sunday Business Post reports that the arrangement could provide a template for other lenders to follow, including Bank of Ireland, PTSB, Ulster Bank and KBC. The Sunday Business Post, 30th April



Galway Marketplace Development: The Sunday Business Post reports that Galway is to get a ‘Covent Garden style covered marketplace’ as part of a project planned by Michael Maye (a telecoms entrepreneur), and promoted by Davy Private Finance. The project involves a sizeable build in one of the oldest parts of the city and will include a 180-bedroom boutique hotel, a covered marketplace with capacity for 80 stalls, and 150 parking spaces. The 1.5 acre development will incorporate the City Tribune newspaper offices, and will include a restoration of part of the old city wall that dates back to medieval times, and a landscaped public area at the rear of the new market buildings. The new buildings will be four storeys high, including a penthouse rooftop level. The gross development value of the project is €60m, while the build cost is €42m. It is hoped that the development will be finished in time for the European City of Culture celebrations in 2020. The Sunday Business Post, 30th April

Blanchardstown Centre: The Irish Independent reports that Blackstone, the owner of the Blanchardstown Centre, is expected to invest c. €50m revamping the west Dublin shopping centre over the next few years. Blackstone paid c. €950m to acquire the centre in 2016 from Green Property, and sources familiar with the matter have said that the company has set aside money to overhaul the 20-year old centre under a multi-year programme. The Irish Independent, 27th April



Limerick Office Space: The Sunday Business Post reports that two major office developments are about to be launched in Limerick. Wychwood Properties Limited has just completed the 83,000 sq. ft. Block 3 at City East Plaza on the Ballysimon Road in the eastern suburbs, having purchased City East for c. €5.25m in 2015. The previous owner had already developed Block 1 which was predominantly let to Northern Trust, who subsequently sought more office space, leading to the development of a second block. Wychwood have now developed Block 3, which letting agent Savills have advised is the only 80,000 sq. ft. office building ready for occupation in the western side of the country. Savills are quoting c. €20 psf for the development, depending on the size and specification of required space. In a separate development, Limerick’s united city and county council has begun work on the 0.6 acre ‘Gardens International’ office site on Henry Street in the city centre. The development will provide 112,000 sq. ft. of commercial space, mostly Grade A offices, which will be completed in Q3 2018. The Sunday Business Post, 30th April

Spencer Dock: Ronan Group Real Estate (RGRE) has sought revised planning permission for slightly over half of its six-acre site located on the waterfront at Spencer Dock in the north Dublin docklands. RGRE acquired the site last year for a reported c. €43m, and at that time the receivers involved had obtained planning permission for a 340,000 sq. ft. office development and a 169-bedroom hotel for this section of the site, known as Spencer Place. However RGRE is now seeking approval for a larger development, which will include 717,000 sq. ft. of office space, a 212-bedroom hotel and a number of restaurant / retail units. As part of the plans, the protected former British Rail Hotel at 58-59 North Wall Quay will be refurbished as a c. 29,000 sq. ft. office block with substantial restaurant and bar areas at ground floor and basement levels, while new modern offices and a hotel will be built to the rear and side. The remainder of the site is not covered by the new planning application, and already has planning in place for 165 apartments (23 one-bed, 117 two-bed and 25 three-bed units). In total it is estimated that the floor area of the new scheme will be approximately one million sq. ft. The development will also complete the original Spencer Dock masterplan where RGRE has already developed an estimated two million sq. ft. of space including the Convention Centre, PwC’s offices and 620 apartments in the Spencer Dock complex. The Irish Times, 26th April

Holles Street: Lisney is guiding €3.2m for a 4,605 sq. ft. office block located at 22-23 Holles Street in Dublin 2. The recently refurbished, four-storey, over-basement building was developed in 1992 and is leased to Baker Tilly Hughes Blake on a 25-year lease from 2006 at a rent of €200k p.a., with five-yearly upwards-only rent reviews. The property will provide an immediate yield of c. 6%, however the selling agents advise that with the current rent equating to less than €40 psf, there is scope for rental growth in the future. The Irish Times, 26th April

Tuansgate, Tallaght: CBRE is guiding in excess of €5.8m for 1 and 6 Tuansgate, a modern office and retail building in the centre of Tallaght, county Dublin. The property, which includes a modern office building and a retail unit with a combined floor area of c. 40,000 sq. ft. and 105 car spaces, produces rental income of c. €521k p.a. The office space extends to c. 36,000 sq. ft. and is fully occupied by the Dublin & Dún Laoghaire Education & Training Board (who occupy more than 80% of the space under three leases with a weighted average unexpired lease term of over eight years) and Tetrapak. The 3,296 sq. ft. retail unit is rented by Royal Foods (Ireland), trading as Spice Bazaar under a nine year and nine month lease from 2014. The overall sales price works out at c. €146 psf, offering a net initial yield of c. 8.6%. The Irish Times, 26th April

One Grand Parade: Credit Suisse has retained Cushman & Wakefield to manage the sale of One Grand Parade in Dublin 6 for over €23m, a little over two years after acquiring the property for €18.1m. The six-storey office block extends to 31,534 sq. ft. and contains a basement car-park with 15 spaces (rented at €3,500 p.a.). Zendesk International occupies 21,000 sq. ft. of the building, with the two remaining floors let to Oasis Global Management Company and the Kuwaiti Embassy. The current rental income exceeds €1m p.a., with the tenant’s rents ranging from €26 – €52.50 psf. The current rent roll will provide the new owners with a net yield of c. 4.29% based on a €23m valuation. The weighted average unexpired lease term is just over three years, and includes an earlier expiry or a break option, which could provide the new owner with significant asset management opportunities. The Irish Times, 26th April

Sandyford Office Suites: BNP Paribas Real Estate is handling the sale of three rented office suites in the Apex Business Centre at Blackthorn Road in Sandyford, Dublin 18. The suites, which produce a combined rental income of c. €198k p.a., will be offered for sale individually, or in a single lot for €2.63m, offering a net initial yield of c. 7.22%. If the units are sold separately, BNP will be guiding €600k for Unit B, which is let to MRO Research Solutions at a passing rent of €30k p.a. A second suite, let to Ethos Engineering at an annual rent of €56k, will be offered at a price of €610k, while the third suite, which is let to Allied Pension Trustees at a rent of €112k, is expected to sell for €1.41m. The Irish Times, 25th April



Carton House: The Sunday Times reports that NAMA is preparing to bring Carton House hotel resort to the market in the next two months, in what is likely to be the biggest hotel sale of 2017. NAMA will shortly select an agent to market the 165-bedroom hotel, which sits on 1,100 acres in county Kildare. The hotel was developed by the Mallaghan Family and developers Paddy Kelly and Nobby O’Reilly, and was once part of the Project Tolka portfolio, which included many of Mr Kelly’s property loans. It was removed from the portfolio sale last year. The Sunday Times, 30th April

Connemara Coast Hotel: CBRE is inviting offers of c. €12m for the four-star Connemara Coast Hotel in Furbo, Co. Galway. The hotel contains 141 bedrooms, extensive conference and banqueting facilities, a variety of dining options, two bars and a leisure centre and is being sold by Sinnott Hotels, who has traded from the hotel for more than 30 years. The highly profitable hotel is located on a 14.7-acre site overlooking Galway Bay, 10 minutes’ drive from Galway city centre, and is strategically located along part of the Wild Atlantic Way. The hotel is being sold unencumbered, and offers new owners complete flexibility on branding and management. The Irish Times, 26th April

Knightsbrook Hotel: Offers of €18m are being sought by Cushman & Wakefield for the four-star Knightsbrook Hotel Spa and Golf Resort in Trim, Co. Meath. The resort includes a 131-bedroom hotel, 28 three-bed self-catering units, a 1,100 delegate conference centre, banqueting facilities, a range of restaurants and bars, a spa, a health club, an 18 hole golf course and parking for 500 cars. To facilitate the golf course, the Cusack management took a 99-year lease of a neighbouring family’s 168-acre farm, which is rented at €150k p.a. and subject to five-yearly reviews based on the Consumer Price Index. The Irish Times, 26th April



Clongriffin Apartments: Gannon Properties has applied to Dublin City Council to construct a 16-storey, 139 unit apartment block in Clongriffin in North Dublin. The application covers the construction of 28 one-bedroom, 97 two-bedroom and 14 three-bedroom units above a basement containing 139 car parking spaces. NAMA Wine Lake, 30th April

Drumcondra Apartments: An application has been lodged with Dublin City Council for permission to construct a 26-apartment development on Richmond Road in Drumcondra. The development will consist of two five-storey buildings and will contain eight one-bedroom, sixteen two-bedroom and two three-bedroom units. The site currently contains two houses in a pre-1963 bedsit layout. NAMA Wine Lake, 30th April

KBC Mortgage Rates: KBC is reducing its fixed rates for mortgage holders by up to 0.35%, becoming the latest lender to do so in an attempt to stop mortgage customers switching. The bank will reduce its two-year, three-year and five-year rates for new and existing customers, and will offer a three year fixed-rate of 3.10% to customers who take out a current account. Customers who mandate their salary into a KBC current account receive a reduction of 0.2% on their mortgage rates. In addition, in a move to attract existing mortgage holders to move to KBC, the bank is increasing the amount it offers towards legal and professional fees for switchers from €2,000 to €3,000. The Irish Independent, 28th April

Local Authority / Public Body Housing Sites: The Irish Independent reports that 800 sites owned by local authorities and public bodies will be offered to the private market in an effort to boost housing supply. Landbanks totalling 2,000 hectares which are controlled by city and county councils, and bodies such as CIÉ, the IDA and HSE, are to be offered to private developers and housing associations in an effort to provide at least 50,000 new homes and resolve the ongoing housing crisis. The Department of Housing has identified 30 sites owned by public bodies in Dublin, Galway, Cork, Limerick and Waterford, a further 73 sites controlled by the Housing Agency, and an additional 700 sites controlled by city and county councils nationwide. Expressions of interest from developers will be sought over the coming days, and developers will be invited to build homes under a licence agreement whereby land could either be sold, provided for free, subject to a long-term lease or an arrangement whereby the cost of the land is repaid after newly constructed units are sold. The Irish Independent reports that the State would have to achieve a return for offering the lands, such as the provision of social housing units. In addition, appraisals will be completed prior to lands being offered to determine the maximum number of units that could be accommodated on each site. Local authorities will be free to dictate the number of homes for each site and mix of tenure types, and they could also set upper price limits for some home types, and oblige developers to provide affordable rental, private rental or housing for the elderly. Developments on local authority lands will benefit from a fast-track planning process. The Irish Independent, 27th April

Cork City Apartments: Two apartment and office investments in Cork city centre have gone on sale this week. Joint agents CBRE and Cushman & Wakefield are guiding in excess of €15.5m for Copley Court, a student accommodation and office complex located a short distance from St Patrick’s Street in Cork city centre. The complex contains 37 student apartments, c. 43,000 sq. ft. of commercial space and 60 car spaces, and is producing a rent roll of c. €1.22m p.a. The other investment, Leeside Apartments, is on the market for €7.75m and contains 78 one-, two-, three- and four-bed apartments spread across five blocks. The apartments are used as both private rented residential and student accommodation and 32 car spaces are available with the complex. Leeside Apartments is located on Bachelor’s Quay in the city centre and produces a rent roll of c. €677k p.a. through 87% occupancy. Both investments are close to UCC and other colleges in the area. The Irish Times, 25th April

Dublin 8 Development Site: BNP Paribas Real Estate is guiding €7.25m for a 0.82-acre site on Brown Street in Dublin 8 which has planning permission for 281 student bedrooms and an 8,600 sq. ft. science and technology facility. The site is located off Cork Street and is within walking distance of Trinity College, RCSIU and DIT. The Irish Times, 26th April



Limerick Industrial Facility: Cushman & Wakefield is guiding in excess of €2.7m for the former Bantra industrial facility, which is located at Raheen Business Park in Limerick. The building contains 85,000 sq. ft. of manufacturing and warehouse facilities, and a further 15,000 sq. ft. of offices. The Irish Times, 26th April



JLL Commercial Property Index: JLL’s latest commercial property index shows that commercial property prices increased by 1.2% in Q1 2017 when compared to the previous quarter, marking the 16th consecutive quarter of growth. Prices have risen by 6.2% in the year to March 2017, however they are still 41% below the peak recorded in Q3 2007. According to the Index, Industrial and Retail properties are leading the continued recovery (increasing by 2-3% in Q1 2017), whereas office prices increased by just 0.3%. The report shows that commercial property rents increased by 1.6% in Q1 2017, and are up 8.5% in the year to March 2017, but still 24% down from a pre-crash peak recorded in Q2 2008. Retail rents increased by 3.7% in the quarter, followed by Industrial, which increased by 3.1%, while office rents were at a similar level. NAMA Wine Lake, 30th April


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