08th November (Issue 71)
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 officially launched the sale of Project Tolka last Friday. However the c. €1.5bn par value loan portfolio does not include Carton House, the hotel and golf resort. The Sunday Business Post reports that while NAMA still intends on selling the asset, they first need to agree outstanding issues with the Mallaghan family. The Sunday Business Post, 6th November
RETAIL
Madrid Portfolio: The Madrid Portfolio, which was previously owned by Bernard McNamara, has been split between Friends First and the Doyle Family. Friends First has purchased nine retail and office properties in Dublin city centre, with the assets located on South William Street, Chatham Row, Coppinger Row and Clarendon Street. Friends First is projecting a return of 4.5% on their investment. The assets purchased by the Doyle family include 6 – 7 Balfe Street, 8 – 9 Balfe Street and 1 Westbury Mall. The Doyle family also own the nearby Westbury hotel and there is potential for them to add 50 bedrooms to their hotel should they decide to redevelop their newly acquired assets. The Irish Times, 2nd November
Crampton Buildings: A well-known retail block in Dublin’s Temple Bar area is due to be offered for sale in early 2017. Ardstone Capital, which bought the portfolio for c. €8.26m in 2014, has not yet set an asking price, but selling agents Bannon is expected to seek a minimum of €13m. The portfolio comprises c. 17,000 sq. ft. of retail space spread across 12 buildings which run along three sides of Crampton Buildings. Some of these buildings are currently being upgraded and amalgamated to boost rental income. The current rental income of c. €583k is expected to rise to c. €700k by the time of sale, offering the purchaser a return of c. 5%. Two of the largest contributors to the current rental income are Elephant & Castle and Gallagher’s Boxty House, who pay annual rents of €160k and €120k. Ardstone is believed to be seeking to reduce its exposure to Irish commercial property assets, instead turning its attention to the new homes sector. The Irish Times, 2nd November
Sandyford Retail: BNP Paribas Real Estate is inviting offers of €2.75m for a retail investment in Sandyford, Co. Dublin. The 3,895 sq. ft. building is let under separate tenancies to Londis, a Café to Go coffee shop and a Bank of Ireland ATM. The current rental income of c. €140k p.a. (of which c. €123k is from Londis) is due to rise to c. €193k p.a. in January 2017. The property is part of the Atrium office development where Microsoft is the largest tenant. The UK developer U+I own the Avid Technologies property which is directly across from the retail investment, and has recently secured planning permission to demolish the building and replace it with 147 apartments, a crèche, café and gym in a new five to eight storey block. The Irish Times, 2nd November
OFFICE
Ulysses / Millennium Park Portfolio: Tetrarch Capital and their joint venture partner Pimco have agreed the sale of the Ulysses and Millennium Park office portfolio to the ESB pension scheme for an undisclosed amount, believed to be in excess of €140m. The portfolio consists of six office properties in Dublin 1 (c. 347,000 sq. ft.) and a further six offices in Millennium Park, Naas, Co. Kildare (c. 142,000 sq. ft.). The annual rental income of the portfolio is understood to be c. €10m. Approximately 56% of the portfolio is let to Government covenants, while the portfolio also includes Bulgari, Kerry Group and Version 1. The transaction will require approval from the Competition and Consumer Protection Commission and is expected to be completed before Christmas. The Irish Times, 4th November
Cumberland House: Planning permission has been granted for a c. €9.3m office development on Fenian Street in Dublin 2. The Hibernia REIT development covers phase two of the overall development of Cumberland House. The first phase saw the recent refurbishment of the property to accommodate Twitter’s new headquarters. This new phase will allow for the construction of nearly 75,000 sq. ft. of office space over six floors. The Sunday Business Post, 6th November
Central Bank HQ: The Central Bank has confirmed that Hines has been chosen as the preferred bidder for its HQ and two adjoining buildings on Dame Street in Dublin. The bank did not confirm the purchase price, however it is believed to have been close to, but below, the €65m guide price. The properties were highly sought after, with Hines being chosen as the preferred bidder ahead of five other bidders.
While Hines has not commented on their plans for the properties, one of the most likely plans is that the former HQ is given a substantial refurbishment to convert the property into high-grade office space. The potential cost of this refurbishment is c. €10m. The Irish Times, 2nd November
HOTEL
North Wall Quay: Paddy McKillen Jr has submitted scaled down plans for a hotel in Dublin’s docklands after a previous proposal for a 93-bedroom hotel was rejected by Dublin City Council. The previous proposal was rejected after the council ruled that the proposed hotel would “adversely impact on the structure and integrity” of 82 North Wall Quay, a former warehouse which is a protected structure. The original plans involved adding an additional five stories to the property, but this has now been scaled back to an additional two floors, meaning the revised hotel will contain 58 bedrooms. The site is located beside the €700m Dublin Landings scheme of offices and apartments, and the new Central Bank headquarters. The Sunday Times, 6th November
RESIDENTIAL / LAND
Smithfield Lofts: Hooke & McDonald is guiding €9.5m for 44 apartments (16 one-beds and 28 two-beds) and six two-bed townhouses from the Smithfield Lofts development in Smithfield, Dublin 7. The guide price equates to c. €180k per apartment and c. €250k per townhouse. The sale includes 33 basement level parking spaces, but does not cover the entire 63 unit development, which also contains ground floor commercial accommodation. All of the units are occupied at present, with the exception of one unit which is being retained to facilitate viewings. The current rental income of c. €619k p.a. offers a gross yield of c. 9.35%. The Irish Times, 2nd November
House building: The latest data from Construction Information Services (CIS) shows that c. 11,550 housing units are currently being constructed in Ireland, with a further 12,338 having received planning permission in the first nine months of 2016. This is a significant increase on last year, but is still significantly below the forecast demand for 25,000 units per year. According to CIS, c. 9,000 properties went on site in the first nine months of 2016 as part of multi-unit developments, representing a c. 25% increase on the same period in 2015. Of these units, c. 4,700 units were located in Dublin, with a further c. 1,400 in Munster. Approximately 2,550 one off houses have been started since January. The Irish Times, 4th November
Navan Site: CBRE is guiding €5.95m for a 51-acre site on the outskirts of Navan, Co. Meath. The site, which is zoned for high-density residential development, is being sold by a receiver, Tom O’Brien of Mazars. The site was designated as the Clonmagadden Valley Strategic Development Zone before the economic downturn, which allows for the development of up to 1,400 residential units once a town centre is in place. However, Robert Colleran of CBRE believes that it may now be possible to amend the planning conditions for the site, to allow for a low-density residential scheme. The Irish Times, 2nd November
Sandyford House: CBRE has been instructed to call for best bids for the landmark Sandyford House pub, in Sandyford, Dublin 18. The property, which is guiding over €2m, has potential as either a pub or a redevelopment site, thereby attracting the interest of both publicans and developers. Under the recently-implemented Dun Laoghaire Development Plan 2016-2022, the property is zoned ‘Neighbourhood Centre – to protect, provide for and / or improve mixed use neighbourhood facilities’. The overall site extends to 1.17-acres and includes a 13,240 sq. ft. licenced premises which currently enjoys a high turnover. The site also includes parking for over 100 cars and a vacant retail unit. The Irish Times, 3rd November
Help-to-Buy Scheme: The Government is to lower the cap for the ‘help-to-buy’ scheme announced in last month’s budget from €600k to €500k. Under the initial scheme, first-time buyers (FTBs) of new homes and self-builds would qualify for a tax rebate worth up to 5% of the price of a home to a value of €400k. FTBs purchasing homes up to €600k would also have qualified for the rebate, however it would have been capped at €20k. Fianna Fáil has since objected to this, describing it as a “mansion grant”. The Irish Times now reports that Fianna Fáil and Fine Gael have reached an agreement on the scheme, whereby the cap will be lowered to €500k. In return Fianna Fáil will not propose any amendments to the Finance Bill, allowing it to be brought into legislation. The Irish Times, 3rd November
Central Bank Mortgage Rules: Figures released by the Central Bank show that one in six buyers were exempted from its recently implemented mortgage lending rules. Of the c. 11,000 loans drawn down by residential buyers in the first half of 2016, 1,744 (16%) received an exemption. The most common exemption was on income multiples (which allows homebuyers to borrow more than 3.5 times their income), while a significant number of buyers borrowed more than 80% of the cost of their home (or 90% for first time buyers up to €220,000). The Irish Times, 7th November
INDUSTRIAL / LOGISTICS
Northwest Business Park: William Harvey & Co is guiding c. €2.95m for a modern detached distribution and office building in Northwest Business Park at Ballycoolin, Dublin. The 25,912 sq. ft. building is located on a 2.25-acre site and is let to DSV Air & Sea on a 10-year lease from July 2010. The current rent of the building is €199k p.a., offering an initial yield of 6.46%. The selling agent has expressed a view that the investment is currently under-rented. The Irish Times, 2nd November
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