11th May (Issue 296)

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.




Moxy Hotel, Dublin The Moxy hotel in Dublin has been sold for c€35m, in what is the first major hotel sale in the capital city this year. Investment group Midwest Holding sold the hotel to The MHL Hotel Collection, whose brands also include The Westin, The Intercontinental, Powerscourt Resort, The Morgan, and the Strand Hotel in Limerick. A statement from real estate group CBRE said that while the hotel sale was an off-market deal, the transaction attracted “strong interest from a significant number of established domestic and international property investors, hotel funds, and private equity companies.” The Moxy Dublin City is located immediately behind the new Clery’s development in Dublin’s north inner city. The hotel opened in October 2019 and is made up of 157 bedrooms (€223k per room), with extensive bar and restaurant space on the ground floor. Irish Independent, 7th May

Baggot Street, Dublin 2 With the construction of its new headquarters at Fitzwilliam 27 now almost completed, the ESB is seeking a buyer for the landmark premises of Larry Murphy’s on nearby Lower Baggot Street. The property is being offered to the market by John Hughes of CBRE at a guide price of €1 million. Located at 43-44 Lower Baggot Street, and at the junction of Fitzwilliam Street Lower, the property is beside the headquarters of the Department of Health at Miesian Plaza, and within a short stroll of the headquarters of both the ESB and Slack Technologies at the newly developed Fitzwilliam 27 and 28 office scheme. The property comprises a substantial four-storey over-basement licensed premises of 465sq m (c5,000sq ft) and consists of a lounge bar at ground floor and basement levels, galley kitchen, cellar storage with office accommodation on the upper three floors. The pub premises, which has not traded for several years, is fitted out in a traditional style but would require refurbishment before reopening for trade. The Irish Times, 5th May



Donnybrook, Dublin 4 It was reported in the Irish Times that Donnybrook House has been put up for sale. Acquired by British property developer U+I and US-headquartered investor Colony Capital for c€10 million in 2014, the former AIB computer services centre has since been redeveloped into a five-storey office building extending to c66,525sq ft. The property is being offered to the market at a guide price of €27 million by agent Savills on behalf of the receiver, Kieran Wallace of KPMG. Donnybrook House underwent an extensive refurbishment in 2018. The redesign and reconfiguration of the property by architects Henry J Lyons saw it being transformed from a tired and outdated bank building into a modern mixed-use investment comprising 45,000sq ft of office space over four floors, along with accommodation for a 4,000sq ft restaurant, 2,000sq ft café and 18,000sq ft of gym facilities, and underground parking. DBH, as it is now known, comes for sale with the benefit of an existing rent roll of €680,000 per annum derived from a number of tenants including Mark Anthony Brands, Irish housebuilder D|D|RES Properties, and Raw Gyms. The vacant space in the building is predominantly offices. The ground floor meanwhile provides for separate café and restaurant units. The Irish Times, 5th May

Merchant Square, Galway The combination of immediate rental income and significant reversionary potential is expected to help drive the sale of a mixed-use investment opportunity which has come to the market in Galway city centre. Located at the heart of the city’s central business district, Merchants Square is a modern building comprising a total of 2,003sq m (21,560sq ft) over four levels. The first three floors are taken up by offices while the fourth floor comprises three penthouse apartments. The property is being offered for sale by agent Cushman & Wakefield at a guide price of €6.5 million. Merchants Square produces a total of €372,070 in annual rental income but has substantial reversionary potential. The building also offers the prospective purchaser the opportunity for further asset management with full planning permission granted in 2019 for the construction of an additional floor. This proposed floor would increase the gross area of the building by 20 per cent giving the buyer scope to increase rental income while also adding significantly to the value of the asset itself. The Irish Times, 5th May



PWC, Dublin The Middle Eastern owners of PwC’s headquarters on Dublin’s North Wall Quay have issued a request for proposal (RFP) to several commercial real estate advisers with a view to offering the property to the market later this year. It is anticipated that the building will command a price in excess of €265 million and see significant interest from international investors. The nine-storey over basement PwC office complex has an overall floor area of 21,054sq m (226,624sq ft) and was developed in 2007 by the now-defunct Treasury Holdings. The property’s current owners set a record for the Dublin office market when they paid €242 million to acquire it through London-based AGC Equity Partners in June 2016. One Spencer Dock is let to PwC under a 25-year lease with upward-only rent reviews every five years. The lease has just under 11 years left to run. The Irish Times, 5th May

Citywest, Dublin Colliers Ireland has been instructed to sell 2050 Orchard Avenue in Dublin‘s Citywest Business Campus. Built in 2008 by Davy Hickey Properties and acquired by Henley Bartra in 2018, the multi-let investment comprises nine modern purpose-built office and light industrial units across two blocks. The nine units extend to 4,121 square metres with 102 car parking spaces. The units are fully let to a mixture of national and international tenants including Oradeo, euNetworks, Fitzers, TDS, Aeolus Engine Services and KCI Medical (acquired by 3M in 2019). Producing a rental income of €730,674 per annum, with a WAULT of 4 years, c36 per cent of the rental income is derived from TDS and 25 per cent from 3M. The balance of the income is from the remaining four tenants. Colliers is guiding €9.3 million which equates to a net initial yield of 7.14 per cent and capital value of €210 per square foot after allowing for standard purchaser’s costs of 9.96 per cent. The Business Post, 9th May



Grand Canal Harbour, Dublin 8 Developer Pat Crean’s Marlet Property Group has agreed a €147 million financing facility with AIG to fund the delivery of its Grand Canal Harbour scheme in Dublin 8. The transaction represents the largest financing deal completed in the capital so far in 2021 and will be used for the construction of up to 596 apartments and 7,060sq m (76,000sq ft) of retail, clinical, and office (co-working) space, and 1,700sq m (18,000sq ft) of amenity space. The Grand Canal Harbour scheme is one of six developments within the Castle portfolio, Ireland’s largest available PRS portfolio, comprising approximately 2,000 apartments and duplexes distributed across Dublin and due for delivery between July 2021 and March 2024. The portfolio, which is on the market currently through sole adviser Cantor Fitzgerald, is expected to attract offers in excess of €1 billion. The Irish Times, 5th May

Bishopstown, Cork A tract of 21 acres of development land in a western suburb of Cork city has been brought to the market by CBRE, which is quoting €4.75m for it. That is less than one sixth of the €31m that was paid for it during the Celtic Tiger era. The vendors are receivers Tom Rogers and Jim Luby, acting for Government agency Nama. Located at Garranedarragh in Bishopstown, it is in a sought-after residential area with nearby facilities including Bishopscourt Shopping Centre, Wilton Shopping Centre and it is convenient to Cork University Hospital and UCC. It is located just 5.5km south-west of the city centre and only 2.3km from Wilton. The site has a positive planning history as it had permission for 249 residential units, including 119 apartments, 130 houses and a creche. This permission has just recently expired. Irish Independent, 6th May

Barrymore Road, Athlone Two parcels of land extending to 20.3 acres in Co Roscommon, just outside the town of Athlone, are for sale with a €3m guide price. Situated on Barrymore Road in a suburban area of the town, one parcel comprising 14.77 acres has planning permission for 15 detached houses. Also in this section are 2.75 acres zoned transitional agriculture. Irish Independent, 6th May

Slane Road, Drogheda Agent Bannon is guiding a price of €3.75 million for a 46-acre landbank strategically positioned on the Slane Road between the M1 motorway and Drogheda town centre. The property, which is in agricultural use currently, is expected to see strong interest from both residential and commercial developers, given its potential to accommodate a variety of uses. The entire holding is zoned “mixed-use (C1)” under the terms of the draft Louth County Development Plan 2021-2027. The objective of this zoning is “to provide for commercial, business and supporting residential uses”. The property, which is in agricultural use currently, is expected to see strong interest from both residential and commercial developers, given its potential to accommodate a variety of uses.  The Irish Times, 5th May

Kennedy Wilson Kennedy Wilson is now collecting nearly $1,000 more in average rent per home in Ireland compared with the US. New filings published by the US real estate firm, which has 2,067 rental units in Ireland, show the average monthly rent in its Irish residential portfolio is now $2,525 (€2,075) per unit. This is significantly ahead of its average in the US, where it collects $1,598 per unit each month. Last year, the firm stated it has plans to build more than 4,000 more rental apartments in Ireland up to 2024. Kennedy Wilson is one of the largest institutional landlords in Dublin, controlling large private rental schemes such as Capital Dock, a 190-apartment, 22-storey built-to-let tower in Dublin’s Docklands. The latest quarterly filings published by Kennedy Wilson, which cover the first quarter of 2021, show that the average rent of its Irish units was down slightly from $2,599 to $2,525. Compared with the same period in 2020, total revenues collected by Kennedy Wilson in Ireland were down 5.8 per cent to $6.8 million. The Business Post, 9th May

Planning Applications An Bord Pleanála told the Government it had “significantly underestimated” just how much work would be involved in dealing with applications under the controversial Strategic Housing Development (SHD) application process. The planning board said it had assigned just six inspectors to the process at first, but that this had more than doubled under the weight of work required. In a submission to the Department of Public Expenditure-led review of the National Development Plan, the board said it needed 16 extra staff to manage its workload. The agency said a major increase in manpower would be needed to deal with the “predicted surge in applications and the increased complexity of cases that come before us”. On SHD’s it said it expected a significant rise in pre-application requests and applications over the next 12 to 18 months. It said that even though the SHD process was winding down, it thought it was likely it would be making decisions on it until at least mid-2022. The Irish Times, 11th May

Housing The Business Post reported that investment funds have outbid affordable housing bodies (AHB) on more than 400 homes in the past four weeks, with offers of up to €80,000 more per unit. This includes 142 homes in the Mullen Park estate, which the Tuath affordable housing body had hoped to buy for social and affordable housing. Declan Dunne, the chief executive of the Respond affordable housing body, said his organisation alone had lost out on 267 units in the past four weeks to institutional investors. The revelation comes as the government is scrambling to limit the impact institutional funds can have on the housing market. The coalition is under intense pressure to act after the Business Post’s reporting on the purchase of most of the 170 houses in the Mullen Park estate in Maynooth by Round Hill Capital, a London-based global investment firm, sparked political and public controversy. Darragh O’Brien, the Minister for Housing, is working on plans to restrict the power of institutional funds in the housing market by potentially ringfencing more than half of the units in residential developments for private buyers. O’Brien is working on plans to protect more than 50% of new residential developments from bulk purchase deals by institutional investors. The Business Post, 9th May

Cork Student Accommodation Three more blocks of student accommodation, ranging in height from five to 10 storeys, are in the pipeline for Victoria Cross in Cork city if planners endorse a €31m proposal from Bellmount Developments Ltd. Permission to build the accommodation on a 0.22-hectare site on Wilton Road is being sought directly from An Bord Pleanála as the application is for more than 200 student bed spaces, which qualifies as a strategic housing development (SHD). If the project is rubber-stamped by planners, it will mean the construction of 40 student apartments, ranging in size from single-bed studio apartments to eight-bed apartments, comprising 243 bed spaces, on a site that has been home to Kellehers Auto Centre, which is to relocate. Owners of the auto centre, Séamus and Pádraig Kelleher, are behind Bellmount Developments, which last year got the go-ahead for a 137-bed student complex, stretching to six storeys, also in Victoria Cross, at a site that was formerly home to Kellehers Tyres, and is just beyond the site of the current proposal. Between them, the two schemes will add 380 student beds to the area. Irish Examiner, 6th May



Goodbody Report According to Goodbody Stockbrokers, international sources account for 80% of development financing in Ireland over recent years. Over the three years to the end of 2019, the report estimates that development finance amounted to €5.4bn per annum. Of this, only €1.2bn (22%) emanated from domestic sources. This is a vital difference to the previous property cycle of the 2000s, whereby domestic banks funded most of the development – with ultimately disastrous consequences – through a large expansion of their balance sheets. With banks now under a vastly different regulatory regime, risk appetite clearly reduced and the number of players in the market continuing to fall, international capital has become vital in funding development in real estate. Given the boom in the office-building sector over recent years, it is no surprise that commercial real estate accounted for a majority (56%) of total development finance for real estate over the 2017-2019 period. However, if Ireland is to achieve its housebuilding target of c.35K per annum over the coming years, annual capital requirements could grow to €12.5bn, with the share of this capital coming from international sources rising to as high as 87%. Without international capital, the financing of much-needed offices to facilitate the surge in FDI jobs over recent years would not have been able to happen and the required ramp up in housebuilding in the coming years cannot happen either. In this way, stable international capital to fund REITs and PLCs, is crucial for Ireland. Goodbody, International Capital Report

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