10th May (Issue 45)
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
NAMA Loan Sales: Lone Star, Cerberus and Oaktree Capital are all believed to have progressed to the next round of bidding for NAMA’s €4.7bn par value loan portfolios, Projects Ruby and Emerald. The portfolios consist of distressed assets and may sell for as little as 10c in the Euro. It is unclear whether bids from Deutsche Bank and a joint bid from Goldman Sachs / CarVal have progressed or not. NAMA Wine Lake, 8th May
RETAIL
Tommy Hilfiger Store: The Brennan family has completed the purchase of the Tommy Hilfiger store on Grafton Street for €35m. The property was sold by the German bank Deka, who paid €25m for the store in 2009. Tommy Hilfiger is currently paying an annual rent of €1.7m for the 9,688 sq. ft. property. The Sunday Times, 8th May
Friends First Acquisitions: The Irish Times reports that Friends First has closed one commercial property transaction and appears close to completing another. The company has acquired the remaining 50% of the Royal Hibernian Way shopping mall in Dawson Street, Dublin 2. Now that they have full ownership of the shopping mall, they have asked architects to identify the best ways in which it can be upgraded. The current value of the shopping mall is estimated at €70m – €80m. Friends First is also thought to be close to announcing that it has acquired the Globe Retail Park in Naas for c. €26m. The 143,100 sq. ft. retail park has a current annual rental income of c. €1.7m. The Irish Times, 4th May
Retail REIT: The Sunday Business Post reports that Davidson Kempner, Varde Partners, Oaktree Capital and Marathon Asset Management have commenced talks on forming a REIT which would allow them to realise their respective investments in Irish assets. The REIT would consist of the shopping centres and retail parks which the funds have acquired in recent years. Davy Stockbrokers is believed to be advising on the process, however there are a number of issues which must be addressed before the entities can establish a REIT. These include the fact that the funds would need to reduce the gearing on their assets to comply with stock market legislation. The funds may also struggle to meet their internal return targets, as a number of the assets have not appreciated in value to the levels required. The Sunday Business Post, 8th May
OFFICE
One Spencer Dock: Company officials for Hines have advised that the real estate fund has withdrawn its bid to acquire One Spencer Dock in Dublin’s North Wall Quay. Hines had previously been viewed as the front runner to acquire the property for c. €242m. The property is spread over three blocks and has a total floor area of 226,624 sq. ft. The entire office space is let to PWC under 25 year leases which have over 15 years until expiry. PWC are paying an annual rent of c. €11m (nearly €50 psf). Two other investment firms had previously bid for the property and one of these firms will now be approached to see if they are still interested. The Irish Times, 4th May
Setanta Centre: Hines, Noel Smyth and the Hardwicke Group have all bid for Larry Goodman’s Setanta Centre in Dublin 2. Latest reports puts the value of the property at c. €90m. Kilkenny Design trade out of the property, with turnover from the building understood to be in the region of €4m p.a. Subject to planning permission, the new owners may seek to refurbish or expand the property. The Sunday Business Post, 8th May
Kennedy Wilson Acquisitions: Kennedy Wilson has announced the completion of three transactions in south Dublin, totalling €92.15m. The first building they have acquired is the Chase Building in Sandyford for €62.5m. The Chase Building has a floor area of 175,600 sq. ft. and 242 car spaces. While the net initial yield on the property is c. 4%, the fact that it is only c. 66% occupied will allow them to increase their yield through active management. They have also acquired three office blocks in Blackrock Business Park for €14.4m. These blocks are 98% occupied, have a combined floor area of 50,500 sq. ft. and were completed in 2007. Finally they have acquired the 2.2 acre Leisureplex site in Stillorgan for €15.25m. The site is adjacent to Stillorgan Shopping Centre and is seen as a redevelopment opportunity. The Irish Independent, 6th May
HOTEL
Gresham Hotel: While six parties have bid over €80m for the Gresham hotel, joint agents Christie and CBRE have recommended that just four progress to the next round of bidding. The Sunday Business Post reports that the bidders who have progressed are Apollo, Cerberus, Riu Hotel & Resorts and the Tifco Hotel Group. Apollo, Cerberus and Riu are the three joint highest bidders for the hotel, while Tifco has bid a slightly lower amount. All of the four bids are believed to be in the region of €85m. One factor which is believed to have had a negative impact on the sale is the fact that Blackstone has recently placed the €140m Doubletree by Hilton hotel in Dublin 4 on the market. The Sunday Business Post, 8th May
RESIDENTIAL / LAND
Dún Laoghaire Site: DTZ Sherry Fitzgerald is guiding €2.5m (c. €3.73m per acre) for a 0.67 acre site which partially fronts onto Johnstown Road in Dún Laoghaire, south Dublin. While the site has no live planning permission at this time, approval was previously granted for the development of 31 apartments on the site. This approval has since expired. The Irish Times, 4th May
Danske Bank Mortgages: Danske Bank has retained KPMG to identify potential purchasers for its remaining c. €2bn residential mortgage book. It appears that the book will be sold in tranches, with the first tranche being sold this summer. The book being sold is believed to have a face value of c. €800m and consists of owner-occupier and buy-to-let mortgages, the majority of which are performing. Although the majority of the loans are performing, Danske Bank may have to sell the book at a significant discount as a high percentage of the loans are tracker mortgages. The Sunday Times, 8th May
One Ballsbridge: The Comer Group has advised that they have obtained a three year, non-recourse debt facility from Deutsche Bank for up to €77m, which will be used to complete the development of their One Ballsbridge project. The facility is being undertaken by a subsidiary known as The Ballsbridge Partnership. The project will consist of three blocks which will have a net office area of 135,000 sq. ft., 88 luxury apartments, a 20,000 sq. ft. spa / gym, retail space and 225 car spaces. One Ballsbridge is being completed on the 2.02 acre site which was previously home to the Veterinary College. The Comer Group acquired the site for €22.5m after the property crash, a fraction of the €171.5m which Ray Grehan paid for the site. The Irish Times, 4th May
Treasure Collection: Cairn Homes has retained Savills to manage the sales process for the Treasure Collection, a residential development land portfolio which consists of three sites in Cork which are expected to sell for c. €30m. The key site is 52 acres located in Castletreasure in Douglas. The current zoning for the Castletreasure site allows for 20 to 50 units per hectare. The second site is a 0.5 acre site in Dennehy’s Cross which is near UCC, Wilton Shopping Centre and Cork University Hospital. The site has planning permission for a commercial showroom, three townhouses and a number of apartments overhead, with the approval valid until April 2018. The final site consists of 7.8 acres and is located off Sunday’s Well Road in Cork City. The Irish Times, 4th May
Mortgage Drawdowns: The Banking & Payments Federation Ireland’s Q1 2016 Mortgage Drawdowns Report shows that the total value of mortgage drawdowns (€1.008bn) rose by 2.5% when compared to Q1 2015 (€983m). While the total value rose, the value of first time buyer drawdowns fell by 7.7% (from €501m to €462m). The largest increase recorded was by re-mortgages, which increased by 88.6% (from €41m to €78m). Banking & Payments Federation Ireland Mortgage Drawdowns Q1 2016 Report
Mortgage Rate Reductions: Both AIB and KBC have announced mortgage rate cuts. AIB will reduce its variable rates by 0.25% from 1st July 2016. The reduction will apply to both owner-occupiers and buy-to-let customers and rates will now start from 3.1% (depending on LTV). AIB has also announced that they will cover €2,000 of the costs borne by mortgage holders who switch their mortgage to AIB. KBC will cut variable rates by 0.1% from 23rd May 2016 with the lowest rates ranging from between 3.1% to 3.2%. KBC will also offer a two year fixed mortgage product with rates as low as 2.99% available. The Irish Times, 10th May
Rental Inflation: The Q1 2016 report from Daft.ie on residential rents shows that for the twelve months ending March 2016, the average increase in rents was 9.3% nationally. The most expensive area to rent (based on average rents) is South Dublin, where the average monthly rent is €1,663 (7.4% increase YoY). For the second quarter in a row, West Dublin is the area in Dublin which has the strongest quarterly increase at 2.5%. On average, rents in West Dublin have risen by 11% in the past year to €1,301. The supply of homes to rent has also fallen to a new low, with just 3,082 available nationwide on the first of May 2016. This is substantially below the peak of nearly 24,000 homes in 2009 and over 7,000 in 2014. The Daft.ie Rental Report Q1 2016
OTHER
The Pod: Morrissey’s is guiding €6m for the Old Harcourt Street Station licensed complex in Dublin 2. The property, which is located at the junction of Harcourt Street and Mount Street Lower, was better known as the Pod. Three bars previously operated from the premises, although these closed a few years ago. The 28,255 sq. ft. property is a Grade 1 listed building and is being sold by tender, with bids to be submitted by June 8th. The current owner of the property is John Reynolds. The Irish Times, 9th May
Bank of Ireland Galway: An unnamed investor has paid in excess of the €10.5m guide price for a property in Eyre Square in Galway which is let to Bank of Ireland under a long term lease. The property consists of a two-storey building to the front and a four-storey over basement extension to the rear. The total floor area of the property is 14,661 sq. ft. Bank of Ireland is paying an annual rent of €664k for the property. DTZ managed the sales process. The Irish Times, 4th May
Mater Private: Two of the shortlisted bidders for the Mater Private group, Fresenius and AMP Capital, have withdrawn from the bidding process. The majority owner of the Mater Private group, CapVest, is now understood to be in talks with two private equity firms and an infrastructure fund in an attempt to finalise a transaction. Fresenius was the only firm from the healthcare industry involved in the bidding and had been viewed by some market sources as the most likely acquirer. The Mater Private group is valued at c. €500m. The Irish Times, 5th May
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