10th October (Issue 117)
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.
BUDGET 2018
Government Initiatives: RTÉ reports that no changes are expected to be made to the Help-to-Buy (HTB) scheme in this year’s budget, however there are substantial changes proposed to the rate of stamp duty on commercial property transactions. When commenting on the HTB scheme, RTÉ cites a report commissioned by the Government which states that it is too early to judge the impact of the HTB scheme, which was only introduced last year. On stamp duty for commercial property transactions, RTÉ reports that there is speculation that the Government could increase the rate from 2% to 5% or 6%. RTÉ, 9th October
MARKET COMMENTARY
Q3 2017 Investment Summary: New figures from JLL show that the level of investment in the Irish commercial property market exceeded €1.3bn in the first nine months of 2017, with c. €530m of investment in Q3. The largest transaction in Q3 2017 was the off-market purchase of an un-named Dublin office block for c. €60m. JLL forecast that the total investment volume for 2017 will be between €2bn and €2.5bn, with this assumption based on transactions for The Square in Tallaght (€233m) and the Gibson Hotel (€87m) completing before the end of the year. Even if the projected investment figure of €2.5bn is reached, it will still be significantly lower than the corresponding figure of c. €4.5bn recorded in 2016. The Irish Times, 3rd October
LOAN / PORTFOLIO SALES
Danske Retail Book: The Irish Independent reports that a joint bid by Goldman Sachs and Pimco is close to being chosen as the preferred bid by Danske for its c. €1.8bn retail loan portfolio. The loan portfolio has drawn substantial interest, with institutions such as Bank of Ireland, Prudential and the US hedge fund, Elliott Management reported as rival bidders for the portfolio. Goldman Sachs and Pimco are understood to have offered 95 cents in the Euro for the portfolio. The Irish Independent, 6th October
RETAIL
The Griffeen Centre: QRE are guiding €6.5m for a mixed-use neighbourhood centre in Lucan, Co. Dublin, which will offer a yield of c. 9% based on the guide price. The current rental income of the property, which is understood to be c. 96% occupied, is c. €611k p.a. The property includes seven retail units, six office suites, a crèche, a restaurant, a medical centre and a community centre. The tenants which pay the highest portion of the rent are Centra (€145k p.a.), Pizza Hut (€70k p.a.) and McCabe’s Pharmacy (€50k p.a.). The property, which dates from 2006, is being sold under the instructions of an AIB-appointed receiver. The Irish Times, 4th October
Avoca Stores: Signature Capital has reportedly agreed to acquire two Avoca properties in Dublin and Wicklow from Aramark, on behalf of their private clients. The properties are located at Rathcoole in Dublin and Kilmacanogue in Wicklow. The Sunday Times, 8th October
OFFICE
No. 1 Dublin Landings: The Irish Times reports that Ballymore and its partner Oxley are to commence the forward sale of the first of five office buildings under construction in the new Dublin Landings development in Dublin’s docklands. Joint agents CBRE and Knight Frank are guiding c. €150m for No. 1 Dublin Landings, which will offer an initial return of 4.5%. The 10-storey, 143,158 sq. ft. block has been fully let to the NTMA at a rent of €50 psf for the office space and €4k for each of the 44 car-parking spaces. The building is due to reach ‘practical completion’ in Q1 2018, and depending on the final measurements, the annual rent roll will be c. €7m p.a. The NTMA have taken a 25-year lease on the building, with a break option in year 15. When completed, Dublin Landings will extend to over 1.08m sq. ft. and in addition to offices, retail and restaurant facilities, the development will also contain 288 apartments. The Irish Times, 4th October
Gardner House: The Sunday Times reports that IPUT has agreed to purchase Gardner House, a c. 75,000 sq. ft. office block on Wilton Terrace in Dublin’s Grand Canal for c. €60m. The purchase price represents a much lower price than the c. €83m which IPUT previously sold the property for, to a consortium which included Gerry Conlon and Colum and Ciarán Butler in 2006. The seller of the property is Kennedy Wilson, who acquired loans linked to the property for c. €45m in 2015. The Sunday Times, 8th October
Independent House / Brett Court: CBRE has begun the sales process for an office building occupied by Independent News & Media, an adjoining supermarket and 10 apartments in Dublin’s north city centre, with the portfolio expected to sell for in excess of €24m. The portfolio consists of Independent House and Brett Court, which are located on Talbot Street and Foley Street, and have a combined floor area of 61,000 sq. ft. and rental income of €1.47m p.a. The sale includes 26 basement car spaces. Independent News & Media occupy the office block, paying rent of more than €1.04m p.a. (c. €22 psf), under a 25-year lease from 2004, with a break option in 2024. The supermarket is occupied by Kane’s Supervalu under a 25-year lease from 2004, at a rent of c. €275k p.a. (c. €28 psf). The portfolio, which was developed by Bennett Construction in 2004, is being sold under the instructions of the receiver, Ken Tyrrell of PwC. The Irish Times, 4th October
Park House: Dublin Institute of Technology (DIT) has reportedly paid c. €9m to acquire the Park House office block on North Circular Road in Dublin’s north city centre. The 113,034 sq. ft. block, which dates from 1972 when it was opened as a hotel before being substantially redeveloped, will be used to relocate staff closer to the college’s new c. €500m campus at Grangegorman. The Irish Independent, 5th October
Cisco Galway: Friends First has paid €8.1m, c. €400k below the guide price, for a modern office building in Oranmore Business Park in Co. Galway. The 49,694 sq. ft. property is let to Cisco Corporation under a 25-year lease from 2007, with a break option at the end of 2022. The current rent is c. €774k p.a., with the lease subject to five-yearly upwards-only rent reviews. The sale includes a 99-space basement car park with an additional 42 surface spaces. The Irish Times, 4th October
Century Court: Cushman & Wakefield is guiding in excess of €3m for part of Century Court, a mixed-use development on Upper George’s Street in the centre of Dún Laoghaire in south Dublin. Century Court consists of four blocks extending to 17,544 sq. ft. and included in this sale is Block A, the first to third floors of Block B, the second and third floors of Blocks C and D and 30 underground parking spaces. The rental income from the units for sale is c. €390k p.a. from five tenancies, with the units having a weighted average unexpired lease term of approximately three years. Based on the guide price, the net initial yield is c. 12.5%. Tenants include An Post, Sagem Security, Clickworks, St Nicholas Montessori Society of Ireland and The Saint John of God Trust (Lucena Clinic). There are three floors of vacant office space in Block B, offering the purchaser the opportunity to increase the rental income in the short-term. The Irish Times, 3rd October
HOTEL
Pembroke Place Ballsbridge: Lordglen Ltd has sought planning permission from Dublin City Council for a 10,000 sq. ft., 15-suite extension to an aparthotel development in Ballsbridge, Dublin 4. The site of the proposed extension is the former HQ of Cablelink / NTL, with planning permission already in place on the site for a 25,000 sq. ft., 43-suite aparthotel. Lordglen is controlled by Brian, John and Geraldine Kennedy and Liam, Frank and Peter McSharry. NAMA Wine Lake, 8th October
Hampton Hotel: Genport Ltd has sought planning permission from Dublin City Council to add 10 bedrooms to the four-star, 24-bedroom Hampton Hotel on Morehampton Road in Ballsbridge, Dublin 4. The rooms would be accommodated by redeveloping an existing nightclub on the site of the hotel. Genport is controlled by Gene Kavanagh, Brenda Flood and Philip Smyth. NAMA Wine Lake, 8th October
The Regency Hotel: The Regency Hotel, which is located along the main route to Dublin Airport from Dublin city centre in north Dublin is being upgraded and rebranded. The hotel is being renamed the Bonnington hotel, bringing it under the same brand as its sister hotel in Dubai, The Bonnington Jumeirah Lakes Towers. As part of the refurbishment, the lobby and reception areas have already been refurbished. Further works to be completed over the next 18 months include a major upgrade to the bedrooms and public and dining areas. The hotel contains 240 bedrooms, a state of the art leisure centre, a new conference centre for 3,000 delegates, and a newly refurbished lounge and bar. The Irish Examiner, 5th October
RESIDENTIAL LAND
Glenveagh IPO: Shares in Glenveagh Properties rose by as much as 16.3% in initial trading, after the company raised €500m from its IPO on the London and Dublin stock exchanges. The increase in the share price pushed the value of the company from €617m to c. €717.6m. The market capitalisation of Glenveagh could see a further substantial increase in the coming weeks, if as expected, Credit Suisse and Davy exercise an option to place another 50m shares on the market within 30 days of the IPO. International investors are believed to have already fully subscribed to this additional share placement. Shares in Glenveagh are trading conditionally until Friday, when the transaction becomes unconditional and is formally listed on the stock exchanges. The Irish Times, 10th October
Glenveagh Sites: The Sunday Business Post reports that Glenveagh Properties has agreed to acquire a number of high-profile residential development sites in Dublin from Cerberus. The sites include the original Chester Beatty library near Shrewsbury Road in Dublin 4 and a second site at Proby Square in Blackrock. The Chester Beatty site has permission for 10 houses while the Proby Square site has permission for 23 units. The purchase price of the sites is c. €22m, with the value of the sites upon completion estimated at c. €59m. In a prospectus circulated to analysts last week, Glenveagh revealed that they have c. 1,700 units which are ‘shovel ready’. The Sunday Business Post, 8th October
North Bank Apartments Portfolio: Hooke & MacDonald are guiding €33m for the North Bank portfolio in the north Dublin docklands, one of the last remaining large-scale Dublin city centre apartment developments to be offered for sale in a single lot by NAMA. The development contains 124 apartments, the majority of which have been upgraded, with the remainder to be refurbished before the sale takes place. The development consists of 124 apartments, split between 31 one-bedroom units, 64 two-bedroom units and 29 three-bedroom units, alongside 85 car parking spaces and a 16,468 sq. ft. vacant ground floor commercial building which is currently in shell and core condition. Hooke & MacDonald estimate that when fully let, the residential development will generate rental income of c. €2.63m p.a., equating to a gross yield of 7.09%. The development was completed in 2007 by Liam Carroll’s Zoe Developments. Hooke & MacDonald have been retained by David Carson of Deloitte, who was appointed as the receiver by NAMA. The Irish Times, 4th October
Shelbourne Plaza: A Davy fund has paid in excess of €23m for the Shelbourne Plaza apartment development in Ringsend, Dublin 4, a purchase price well above the guide price of €18.5m. The development, which was completed in 2007, was sold with vacant possession, with the apartments having previously been leased to a company who provided short-term serviced accommodation. The new owner has the option of continuing this arrangement, with short-term rents in the area ranging from €850 – €1,000 per week for a one-bedroom unit and €1,500 – €2,000 per week for a two-bedroom unit. Of the 52 apartments sold, six are one-bedroom units, 42 are two-bedroom units and four are four-bedroom units. The Irish Times, 4th October
Planning Guidelines: Housing Minister Eoghan Murphy has indicated that changes will be introduced to planning regulations in an effort to address the ongoing housing crisis. The potential changes he has suggested include lifting the height restrictions in core city centre locations and along public transport corridors, and removing the mandatory provision of car-parking for developments in certain areas. Mr Murphy also suggested the development of a new style of accommodation for professionals, whereby they would have their own en-suite bedrooms, but share other facilities, in an effort to bridge the affordability gap between student accommodation and apartments. With regards to increasing the size of cities, the Minister believes that building cities outwards is a failed concept, and that more apartments need to be delivered in Irish cities. The Minister advised that new statutory guidelines would be in place by the end of the year, following the publication of a draft of the new policy provisions by the Department of Housing and Planning by the end of November. The Irish Times, 6th October
Harold’s Cross: Archtree, a newly formed Irish development company, is expected to proceed with a residential development in Harold’s Cross, Dublin 6W, after acquiring a 3.4-acre site for above the €15m guide price. The development will consist of 36 three and four-bedroom houses, for which prices are expected to guide from c. €775k, and 30 apartments which are expected to have asking prices beginning at €360k. Archtree was formed by Shane Barrett, Paul Whitaker and Tom Gilligan. The Irish Times, 4th October
Portmarnock Development: Subsidiaries of the American fund Lone Star have sought planning permission from An Bord Pleanála for 102 houses and 96 apartments at Station Road in Portmarnock, north Dublin. The application is to be decisioned under the fast-track planning regulations by November 29th. The Sunday Times, 8th October
Hole in the Wall Road: Gannon Homes Ltd has sought planning permission from Dublin City Council to develop 13 three-bedroom, two-storey houses on the Hole in the Wall Road in north Dublin city. Gannon Homes is controlled by Gerry Gannon and Aidan Kenny. NAMA Wine Lake, 8th October
Dublin 8 Development: L&S Developments Ltd has applied to Dublin City Council for planning permission to construct a mixed-use building consisting of ten apartments and two retail units on Bow Lane West, near St James’s Hospital in Dublin 8. L&S is controlled by Lisa and Robert Slevin. NAMA Wine Lake, 8th October
Housing Completions: The Department of Housing has published its latest statistics on housing supply, with their figures for completions based on new ESB connections. The figures show that for the months of June, July and August 2017, the total number of units completed nationally was 4,891, giving a monthly average of 1,630, a 31% increase on the monthly average of 1,244 units for all of 2016. Figures from the four local authorities in Dublin show that the combined number of units completed in the capital was 1,564 units for the three-month period, giving a monthly average of 521. The figures for Dublin reflect an increase of 48% on the monthly average for completions in 2016 of 353. NAMA Wine Lake, 8th October
EBS Mortgage Rate: EBS, which is a subsidiary of AIB, has announced interest rate cuts to its fixed-rate mortgage products. The most substantial reduction was to the building society’s five-year rate, which has been cut from 3.8% to 3.25%, with the rate on the one-, two- and three-year fixed rate mortgages being reduced to 3.15%. The reduced rates will apply from October 10th, however existing fixed-rate borrowers will have to wait until their current term expires, or else they may incur a penalty. The Irish Times, 9th October
St James’s Gate Quarter: Diageo has confirmed plans to develop a 12.6-acre site within its St James’s Gate complex in Dublin city centre, and is seeking a development partner for the project. The mixed-use project will consist of residential, office and commercial spaces alongside public spaces. Diageo has not released financial details on the project, which it says will not be fully determined until a development partner is in place. It will also retain ownership and custodianship of a number of key buildings in the quarter, including Arthur Guinness’s residence and St James’s Gate itself. A feasibility study submitted to Dublin City Council by Diageo suggests the 12.6-acre site has the potential to deliver c. 678,000 sq. ft. of office space, c. 54,000 sq. ft. of retail space, c. 237,000 sq. ft. of hotel / leisure facilities and up to 500 homes. The tender process will be managed by Deloitte Real Estate and is expected to take 18 months to complete. The Irish Times, 4th October
INDUSTRIAL
Friends First Acquisition: Friends First has paid c. €25m for a warehouse and distribution facility at the Merrywell Industrial Estate in Ballymount, Dublin 22. The facility was constructed in two sections on an enclosed 9.4-acre site, and the fund has availed of a sale and leaseback opportunity, with a 35-year lease to a tenant who is a subsidiary of Valeo Foods. Based on the lease, the property will offer an overall equivalent yield of 6.2%. The Irish Times, 4th October
OTHER
Trim Primary Care Centre: The Sunday Business Post reports that Barchester Healthcare has placed its primary care centre in Trim, Co. Meath on the market. The centre, which is located alongside Knightsbridge nursing home, is generating a combined income of c. €479k p.a. from four lease agreements. The centre is anchored by the HSE, however there are also GP practices and a pharmacy located on site. The value of the centre is estimated at c. €20m when an adjacent 2.5-acre site is included. The Sunday Business Post, 8th October
Tralee Primary Care Centre: Glencar Medical is understood to have agreed a deal to purchase a primary care centre in Tralee, Co. Kerry, from Lee Strand, a local co-op, for c. €17m. The state-backed company has been active in the market recently, having completed a deal for Mitchelstown Living Health Clinic in Co. Cork in recent weeks, after also acquiring facilities in Wicklow and Mayo earlier this year. The Sunday Times, 8th October
Crèche Portfolio: Offers in excess of €7.6m are being sought by agents Kelly Walsh for a portfolio of six modern crèche facilities in south Dublin and a seventh facility in Greystones, Co. Wicklow. The portfolio is fully let to Park Academy Ltd at a combined rent of c. €647k p.a., offering a return of 8.15% after standard purchaser costs. The agents plan to sell the properties by tender on November 17th, or they can also be bought in individual lots, with the asking price for each individual property available on request. The locations of the crèches include Beacon Court, Beacon South Quarter, Greystones, Cherrywood, Cabinteely and Booterstown Avenue, and the directors of Park Academy will provide a personal guarantee on the rental income of each property for three years. The Irish Times, 4th October
Dublin Pub Sales: New figures from CBRE show that 16 pubs in Dublin were sold in the first nine months of 2017, with a combined sale value in excess of €17.8m. This figure compares with sales of more than €50m in the whole of 2016, c. €50m in 2015 and c. €45m in 2014. Pubs that were sold included Bolands in Stillorgan (sold for well above the €1.4m guide price), JJ Smyth’s on Aungier Street (c. €1.4m) and Sandyford House in Sandyford (c. €1.7m). The decrease in the value of sales is attributed in some degree to improving trading conditions in Dublin leading to a reduction in the number of properties being offered for sale. According to CBRE, four Dublin pubs are currently sale agreed and expected to close in the near future. The Irish Times, 3rd October
Intel Manufacturing Facility: Intel has received planning permission from An Bord Pleanála for a two-storey, c. 969,000 sq. ft. manufacturing facility at its facility in Leixlip, Co. Kildare. While Intel’s corporate parent has yet to confirm that it will proceed with the development on the site, as they are also looking at alternative locations such as Israel, the construction of the facility would be very positive for the labour market. The development of the facility would be expected to create c. 3,000 construction jobs, with 850 jobs created post-completion. The Irish Times, 9th October
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