04th April (Issue 90)
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 Lee: The Irish Independent is reporting that NAMA is preparing to sell a portfolio of loans tied to the late Cork property developer Owen O’Callaghan. It is understood a formal auction for the partially performing loan book, titled Project Lee, could take place in May or June. The Project Lee portfolio is reported to have a par value of c. €250m, and NAMA initially intended to offload the portfolio in 2015, however this was delayed due to a range of legal complexities. The paper also reports that AIB’s Project Cyprus has moved into a second round of bidding. Project Cyprus marks the first major sale of non-performing residential mortgages by a domestic bank, and is understood to be valued at close to €300m.The Irish Independent, 31st March
RETAIL
Navan and Mullingar Shopping Centres: Two US investment companies have withdrawn from their proposed purchases of shopping centres in Navan and Mullingar. Davidson Kempner were due to pay c. €59m for a majority stake in Navan Town Centre, Co. Meath, while Oaktree was in advanced negotiations to pay c. €12m to purchase the Fairgreen retail complex in Mullingar, Co. Westmeath. The loans underpinning both shopping centres, which were developed by Duignan & McCarthy and continued to trade strongly during the recession, were purchased by CarVal investors shortly after the property market crashed. The Irish Times reports that parties close to both transactions have been surprised by the developments, which have come shortly after the Government introduced a 20% withholding tax on property investors. Despite the collapse of the sales, industry leaders are confident that alternative purchasers will emerge shortly. The Irish Times, 29th March
Ballymount Retail Centre: Camgill Development Corporation has purchased Ballymount Retail Centre in west Dublin for c. €14.3m, c. €500k above the guide price quoted by Cushman & Wakefield. The centre was developed in 2006 and contains two detached blocks which extend to c. 97,000 sq. ft. on a c. five-acre site. The buildings contain nine ground-floor retail units and first floor office space, and are producing rental income of c. €1.22m p.a. Over 85% of the rental income comes from leading retailers such as Tilestyle, TJ O’Mahony and Spar. The weighted average unexpired lease term (WAULT) is more than seven years. The sale of the retail park comes weeks after Camgill purchased a large industrial building at the nearby Ballymount Cross Industrial Estate for c. €1.24m. The Irish Times, 29th March
McDonalds Lucan: A private investor has purchased the McDonald’s drive-through restaurant located on Dublin Road in Lucan, south Dublin for c. €2.26m. The purchase price is c. €490k above the guide price, and will offer a net initial yield of c. 5.5%. The building, which extends to 3,347 sq. ft. and was extensively refurbished last year, is let to McDonald’s on a 35-year lease running from 2005 at a rent of €130k p.a., with five-yearly upwards only rent reviews. The restaurant is located c. 800m from Lucan town centre, and just off the N4 Dublin-Galway dual carriageway. The Irish Times, 29th March
OFFICE
Citywest Expansion: IPUT plc and Davy Real Estate are planning to develop an additional 180,000 sq. ft. of office space at the Waterside complex, located at the entrance of the Citywest Business Campus off the N7 dual carriageway in South West Dublin. The two funds have already built and let 220,000 sq. ft. of buildings in the complex, and will hold an equal shareholding in the new c. €60m extension. Joint agents BNP Paribas Real Estate and JLL are planning to quote rents of c. €27.50 psf in the three new buildings, compared to rates of €55 – €60 psf for similar space in Dublin city centre. The new developments will be known as 6, 7 and 8 Waterside, and are due to be ready for fit-out in the next 18 months. The buildings will maintain the current car parking ratio of one space per 323 sq. ft. Buildings will be available to lease on a floor-by-floor basis (with typical floor plates ranging from 17,750 – 19,700 sq. ft.) or on a single block basis (60,000 sq. ft.), and companies looking for a HQ building will have the option of leasing the entire 180,000 sq. ft. development. The Irish Times, 29th March
Globoforce Expansion: Globoforce, an Irish software firm that operates reward and incentive schemes for many leading companies, is due to move from a 10,000 sq. ft. premises in Park West in west Dublin, to a building almost five times that size in the same complex. The company will initially occupy 40,000 sq. ft. at a rent of €11 psf, with an option of taking the remaining 9,248 sq. ft. in the building. Monster Energy (4,500 sq. ft.) and Sysnet Global Solutions (18,000 sq. ft.) have also leased space in Park West recently, paying over €12 psf for their space. The Irish Times, 29th March
Navigation Square: Construction of the c. €90m Navigation Square office complex in Cork’s docklands is set to begin immediately, after all remaining appeals to An Bord Pleanála (ABP) were withdrawn. The scheme, which will consist of four separate blocks on a c. 2.25-acre site in the heart of Cork city centre, will provide 310,000 sq. ft. of office space. O’Callaghan Properties was granted planning permission by Cork City Council last September, however a number of planning objections were lodged against the scheme. The project will create 350 jobs during the construction phase and should be completed within the next 18 months. The new development is the latest in a series of major projects currently underway in Cork city, totalling over €350m. The Irish Independent, 3rd April
HOTEL
St Stephen’s Green Hotel: Brown Table Solutions Ltd has lodged an application with Dublin City Council for permission to convert the Loreto convent hall building at 77 St Stephen’s Green into a 95-bedroom hotel. The project would involve the construction of a nine-storey extension to the existing building, which would accommodate most of the bedrooms. Brown Table is a recently incorporated Irish company controlled by Paul Phelan, Colm Mooney and David Straker-Smith. NAMA Wine Lake, 2nd April
North Dublin Hotel: Gannon Properties has applied to Dublin City Council to construct a new 209-bedroom, seven-storey hotel and 20 apartments at Station Square in Clongriffin in north Dublin city. The Apartments will consist of four one-bedroom, eight two-bedroom, four two-bedroom and study and four three-bed units. NAMA Wine Lake, 2nd April
Hillgrove Hotel, Monaghan: iNua Hospitality has acquired the four-star Hillgrove Hotel in Monaghan from Colm and Audri Herron for an undisclosed sum. The hotel was purchased by the Herrons in 2004, who later spent c. €10m upgrading the premises, including the addition of 43-bedrooms and the development of a leisure centre and spa facility. The hotel is being sold as a going concern, with existing management and employees continuing their employment. The purchase represents iNua’s sixth acquisition in the Irish market in the last three years. The Irish Independent, 3rd April
RESIDENTIAL / LAND
Dún Laoghaire Apartments Sale: Hooke & MacDonald is guiding c. €130m for Ireland’s largest build-to-rent apartment development, the construction of which only began weeks ago. The 319-apartment development on the former Dún Laoghaire golf course in south Dublin is spread across two blocks, the Charlotte Building (159 units) and the Leona Building (160 units). Should the blocks fail to sell in one lot, the agents will seek offers of c. €65m for each block. The new development, which is due to be completed in early 2018, is being funded by NAMA and developed by the Cosgrave Property Group. It is believed that the new apartments will produce an annual rent roll of between €7.17m and €7.84m, offering a yield of 5.5% – 6%. The development will offer a considerable mix of apartments, featuring 197 two-bedroom units, 61 one-beds and 61 three-beds. The Irish Times, 30th March
Rockbrook Sandyford: IRES REIT has stated that it will appeal Dún Laoghaire-Rathdown County Council’s decision to refuse planning permission for its planned development at the Rockbrook scheme in Sandyford. In declining the scheme, which would have contained 465 apartments, the council stated that the proposed development would have an “overbearing impact, would result in an oppressive built environment and would be visually unacceptable at this location”. Additional complaints about the development were received from An Taisce and local residents. As part of the fast-track appeals process, IRES REIT can expect a decision from An Bord Pleanala within 18 weeks, and the company has advised that it will also pursue other options while the appeal takes place. Despite the refusal, Phillip O’Sullivan, an economist with Investec, has stated that he still expects the development to be completed by early 2019. The Irish Times, 3rd April
Activate Capital Investment: Activate Capital is planning to invest an additional c. €100m building new houses over the next six months. The company has already committed c. €150m to support developers building a pipeline of 2,300 homes, of which c. 500 are expected to be completed and sold in 2017. It is backed by the Ireland Strategic Investment Fund (ISIF) and global investment firm KKR, and typically makes an average investment in a housing scheme of about €10m and over 100 units. The company is currently backing the development of 15 sites (typically consisting of starter homes) in areas including Maynooth, Kilcock and Dunboyne. Sunday Business Post, 2nd April
Rathgar Residential Development: Cairn Homes has lodged an application to extend planning permission previously granted by Dublin City Council for a c. 300-unit residential development in Rathgar in south Dublin city. The Marianella development will be situated on a 15-acre site and will consist of a mix of large two and three-bedroom apartments and penthouses and four and five-bedroom homes. NAMA Wine Lake, 2nd April
Dublin Student Accommodation: UK student accommodation specialists GSA (Global Student Accommodation Group) and their joint venture partners Harrison Real Estate Capital have announced the second phase of the New Mill student housing scheme in Dublin’s Liberties area. New Mill II will provide 296 beds and is located immediately adjacent to GSA and Harrison Real Estate Capital’s current New Mill project, which is scheduled to be completed in time for the upcoming autumn academic term. In 2015, the companies announced their intention to invest c. €250m in Dublin student accommodation developments over a five year period. To date, they have c. 1,900 beds either in operation or under construction in Dublin. The Irish Independent, 2nd April
House Price Inflation: Two new quarterly house price reports from MyHome.ie and Daft.ie have shown that house price inflation has risen significantly in Q1 2017. MyHome’s report, produced with Davy, suggests annual house price inflation is currently running at 9% nationally and 10.2% in Dublin. The Daft.ie report suggests that house prices rose by 4.3% in Q1 2017, and that the average price of a house in the State (c. €230k) is now 9.4% higher than this time last year (8.7% higher in Dublin). Davy has attributed the rising prices to Ireland’s strong economic recovery, the Help-to-Buy scheme, looser credit conditions and supply shortages. Regarding supply shortages, the Daft.ie report states that the number of homes on the market was just 20,500 in March 2017, the lowest recorded since it began producing reports in January 2007. The Irish Times, 3rd April
Galway Irish Crystal Showrooms: The Galway Irish Crystal showrooms and factory on the Old Dublin Road in Galway have been bought by the occupying tenant for c. €3.5m. Galway Crystal has been paying a rent of €200k p.a. for the showrooms and an additional building, which date back to 1996. The purchase price is a fraction of the reported €20m developer Bernard McNamara paid for the premises in 2006, just before the property crash. Cushman & Wakefield handled the sale of the 4.6-acre site, which was sold under the instruction of Duff and Phelps. The Irish Times, 29th March
OTHER
Bank of Ireland (BoI) Mayo: The BoI branch in Westport, Co. Mayo, is being offered for sale through Cushman & Wakefield, with a guide price of €2.75m. The property is rented for €219k p.a. and will offer a net return of c. 7.62%, with over 15 years remaining on the lease. The property extends to 7,226 sq. ft. over three levels, is well maintained and enjoys a prime location on the high street. The Irish Times, 29th March
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