13th February (Issue 133)
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.
RETAIL
Bank of Ireland Portfolio: Joint agents Murphy Mulhall and Cushman & Wakefield are guiding €28.5m for a portfolio of 17 Bank of Ireland branches located throughout the country. The 17 buildings produce a combined rental income of €2.29m, with all but two of the leases providing for upwards-only reviews on 25-year leases until 2032. While the agents have a preference to offload the portfolio in a single lot, they are willing to divide it into several lots to facilitate early sales. The agents expect strong interest from Irish and overseas pension and investment funds because of the investment grade tenants and attractive lot sizes. The Irish Times, 7th February
Marks & Spencer Merchants Quay Cork: The two-storey 73,000 sq. ft. Marks & Spencer property at Merchants Quay Shopping Centre on Patrick’s Street in Cork has been sold by US fund Kennedy Wilson in an off-market transaction for c. €30m. It has become the second major Cork city centre purchase by Real IS, an international fund, having last year bought the Capital Development on Grand Parade for €58m. M&S have held the space since 1987 with a current rent roll of €1.6m, showing a c. 5.5% return. The Irish Examiner, 8th February
Merchants Quay Car Park Cork: Colliers International have sold the 720-space Merchant Quay car park and adjoining 40,000 sq. ft. Supervalu supermarket for €40m, on behalf of a company associated with the Roche family, who were the original occupier of the building. Supervalu are paying €500k rent p.a. The purchaser of the car park and supermarket is Dutch-based Orange Investment Managers, partnered with Catella Real Estate. The partnership, established in the last year, specialises in European car park investments, and plans to grow to €250m by the end of 2018. The Irish Examiner, 8th February
No. 16 Wicklow Street: Lisney has brought a prime retail investment property in Dublin city centre to the market guiding €2.4m (€930 psf). No. 16 Wicklow Street, which will be offered for sale by public auction, is a four-storey over basement, mid-terraced building extending to 2,580 sq. ft. The entire property is leased to General Health Food Store (Dublin) Limited, trading as Nourish, under a 35-year lease from July 1993 at €125k p.a. (€48.45 psf). The lease allows for two further upward-only rent reviews in March 2021 and March 2026. The tenant, unaffected by this sale, has traded from the property since 2004 and has its head office based on the upper floors of the property. The tenant company has been operational for over 33 years and opened its eighth store in Dublin in October 2017. Lisney expects No 16 Wicklow Street to interest Irish and international investors alike due to the property’s prime city centre location, strong tenant covenant, long unexpired lease term of 10.4 years, and the favourable full repairing lease with upward-only rent reviews. The Irish Independent, 12th February
15/16 St. George’s Street Waterford: Agent TWM are seeking offers in excess of €1.8m (€112.50 psf) for a 16,000 sq. ft. Argos Store in Waterford city. Argos have traded from the store at 15/16 St. George’s Street for more than 20 years, and negotiated a new 10-year lease from last October at an annual rent of €200k (€12.48 psf). Argos’ success has been helped by its close proximity to an enlarged Penney’s store as well as other traders such as Skechers, Clarks, Pandora, Costa and the strong line-up of traders in the City Square shopping centre. The Irish Times, 7th February
Dolphin’s Barn Dublin 8: Joint agents Lisney and Knight Frank have brought a 5,500 sq. ft. ground floor retail unit in Dolphin’s Barn, Dublin 8 to the market guiding €1.8m (€327 psf). The property, which has four storeys of overhead apartments, is let on a 25-year lease from 2006 to well-known convenience store operator Spar at a rent of €160k (€29 psf) p.a. The Sunday Business Post, 11th February
OFFICE
Hibernia REIT: Hibernia REIT have reported in a trading update that good progress has been made on its office portfolio lettings, with vacancy rates reduced to 7%, and likely to reduce to 2% if all space currently under offer complete. Hibernia reported record office take-up of 3.5m sq. ft. of space in Dublin last year. The group sold three assets for €35.8m, while earlier this month Hibernia announced that it had agreed the purchase of 77 Sir John Rogerson Quay in Dublin’s South Docks for €28.7m, which has been pre-let on a 25 year lease. Initial rent on the building will be €1.8m (€50 psf) per annum. As of 31st December 2017, Hibernia had net debt of €182m and cash and undrawn facilities of €263m following the disposal of the Chancery building. Irish Independent, 8th February
32 Upper Fitzwilliam Street: BNP Paribas Real Estate has secured €2.6m (€478 psf) for a 5,435 sq. ft. office building at 32 Fitzwilliam Street, Dublin 2. The four-storey over basement Georgian house is currently let to the Irish Academy of Computer Training at €120k a year until March 2030 with a break option in 2020. The Irish Times, 7th February
36 Upper Mount Street: BNP Paribas are seeking offers in excess of €1.575m (€350 psf) for a 4,500 sq. ft. vacant Georgian office building at 36 Upper Mount Street, Dublin 2. The five-storey over basement has a number of well-preserved Georgian features but is in need of general refurbishment. There are nine designated car parking spaces to the rear. The Irish Times, 7th February
PORTFOLIO / LOAN SALES
Project Redwood: The Sunday Business Post reports that US fund Lone Star has reignited its interest in the Irish market with a bid for the €2bn AIB bad loan book known as Project Redwood. The fund, which was among the first buyers of Irish loan books, has in more recent times focused on selling down some of its purchases and bidding on smaller assets. However, its engagement in the Redwood process signals renewed interest in the Irish market. Cerberus, which has become the largest buyer of Irish loan books, is also in the running for the AIB book, which is likely to be the first in a series of loan sales by the pillar bank. Other contenders for the portfolio include CarVal, Pimco, Deutsche Bank and Goldman Sachs. The sale process for Project Redwood is set to be completed by the end of April. The Sunday Business Post, 11th February
Lone Star Hotel Portfolio: US fund Lone Star has sold the final 25 hotels from its Amaris Hospitality portfolio, including the Hilton Garden Inn on Dublin’s Custom House Quay, to an Israeli-backed LRC Group for €676m. It brings to a close Lone Star’s foray into the Irish and UK hotel market with Amaris, following the sale in December of the portfolio’s Jurys Inn chain to Swedish investor Pandox for £800m. The sale to LRC of the final tranche of 25 properties includes almost all of the non Jurys Inn-branded hotels in Amaris, which was run for Lone Star from Dublin by Irish hotelier John Brennan. The deal includes 20 Accor-branded hotels in the UK, as well as five Hilton-branded properties, including the Dublin hotel that was Amaris’s last remaining Irish property following the sale of Jurys Inn. Lone Star first entered the hotel market in Ireland and the UK in June 2014 when it bought the Rock and Salt portfolios of distressed property loans from IBRC. This included Anglo Irish Bank loans secured on several Holiday Inn and Thistle branded hotels in the UK. The following year, it paid £680m to buy Jurys Inn, from Oman’s sovereign wealth fund, Royal Bank of Scotland, and an investment group originally put together by financier Derek Quinlan. It followed this with further purchases of Accor hotels, before combining about 90 hotels from its portfolio later in 2015 to form Amaris, installing Mr Brennan as chief executive with Jurys Inn as the linchpin of the group. In 2016, Lone Star started selling down its hotel investments in the UK, and in total it has raised more than £2bn offloading hotel properties in Ireland and the UK in the two years since. The Irish Times, 10th February
HOTEL
Hotel Sales 2017: A new report from Cushman & Wakefield found that while there was increased interest in acquiring regional hotels in Ireland last year, the total value of deals done in the sector tumbled to €270m from a record €720m in 2016. The 2017 figures were boosted in the final quarter of the year by two large hotel sales; the €57m sale of the four-star Carton House Hotel and Golf Resort in Co Kildare and the €87m acquisition of the Gibson Hotel in Dublin’s Docklands by German investment group DekaBank. Despite these large sales, the year was characterised by smaller, single asset transactions and off-market deals. It noted that 63% of the hotel sales last year were for between €1m and €10m each, while 23 sales were for less than €1m each. Regional hotels have seen their economic fortunes broadly lifted as the country’s growth accelerates and the number of visitors to Ireland rises. The Irish Independent, 9th February
RESIDENTIAL / LAND
Shandon Park Blackrock: Cushman & Wakefield is guiding a reserve of €1.85m for a 0.41 acre residential site in Blackrock, south County Dublin, for its upcoming auction on 22nd February. Shandon Park is an established residential area just 1km south of Blackrock village and 1km west of Monkstown village. The subject site has full planning permission for the construction of seven houses ranging in size from 1,523 sq. ft. to 2,104 sq. ft. however it should be noted that one of the plots is not included in the proposed sale. The Irish Independent, 8th February
Kenilworth Motors Site: The former Kenilworth Motors site in Harold’s Cross which is zoned for residential development has been brought to the market guiding €3.5m. Savills Ireland, who are bringing the 0.54 acre development site to the market expect the site to attract considerable interest. An existing vacant building – the ex-Kenilworth Motors car showroom facility – occupies a proportion of the land and access to the site is via Harold’s Cross Road and Laundry Lane. Recent developments in the area include the Archtree development under construction at Mount Tallant Avenue and the Cairn Homes scheme at Marianella. The Irish Independent, 7th February
St. Mary’s Home Ballsbridge: Richmond Homes, the development arm of Avestus Capital Partners in Ireland, has emerged as the buyer of a prime 0.86 acre site in Ballsbridge, Dublin 4. St. Mary’s Home, a three-storey Victorian nursing home was jointly offered for sale by Lisney and Ganly Walters in November last year, is understood to have sold for c. €6m. The building, which is located in close proximity to Herbert Park and Donnybrook village is not a protected structure and can therefore be demolished subject to planning permission. The vendors commissioned a development appraisal of the site prior to the sale, which indicated that the building could accommodate 11 apartments (of 485 sq. ft. to 1,130 sq. ft.), and nine new houses (of 860 sq. ft. to 1,720 sq. ft.). A development of new houses and apartments on the site is likely to command top prices given the site’s location. The Irish Times, 7th February
Daft.ie Q4 2017 Rental Report: The latest report by Daft.ie on residential rents indicates that average rents in Dublin are likely to hit about €2,500 a month before the market starts to taper. Dublin dwellers are already paying c. €375 more a month than they did during the Celtic Tiger despite the introduction of rent controls in 2016. According to the report, asking prices for rented properties in Q4 2017 rose by 2.4% to an average nationwide rent of €1,227. This translates to a 10.4% rise on an annual basis in addition to increases of 13.5% in 2016, 9% in 2015 and 10.7% in 2014, meaning that on a nationwide basis rents are now 19% higher than their 2008 peak. Rents are up by 52% nationally on the lows of 2010 with increases of slightly more than 65% reported in Cork, Galway and Limerick. In Dublin, the explosion in rents is even more noted, with rents up by 4.5% in the last quarter of the year, and by 10.9% on an annual basis. The Daft.ie Rental Report, 13th February
INDUSTRIAL
Core Industrial IPO: US hedge fund York Capital has lined up former executives from NAMA and Applegreen to join the board of an Irish industrial and logistics trust, called Core Industrial, which it plans to float. Core Industrial issued a statement on Tuesday confirming that York Capital plans to list the company on the junior Dublin and London stock markets, raising up to €225m in the process. The New York-based fund, which has about €16.2bn of assets under management, plans to put almost €83m of industrial units into the quoted company. This includes property in locations like Rathcoole, Clondalkin and Finglas in Dublin that it purchased after the property crash. York will also sell about 18 million shares at the initial public offering (IPO) price of €1 each as part of the IPO, leaving it with a remaining 9.9% stake in the company, which will have an initial market value of about €250m. The industrial sector emerged last year as the hottest area of the Irish commercial property market, delivering total returns of about 14.5% for the 12 months to the end of September, according to the MSCI Ireland Property Index. The Irish Times, 13th February
OTHERS
Bid X1 February Auctions: The February BidX1 online auctions will see over 350 lots available for purchase, for which the cumulative sales prices are expected to be c. €60m. Residential properties are going under the hammer on 22nd and 23rd February while the commercial auction will take place on 28th February. The auction’s residential catalogue features more than 250 properties, and includes family homes in prime Dublin locations, period properties, city centre apartments and multi-unit portfolios. The Overlook in Porterstown, Dublin 15, which headlines the catalogue is a detached five-bedroom house on more than two acres overlooking Castleknock Golf Club with a reserve of €1m. In south Dublin, an attractive mid-terrace three-bed house on Sandymount Road in Dublin 4 is going under the hammer with a reserve of €700k, while a semi-detached four bed house on South Lotts Road, also in Dublin 4, is reserved at €630k. A portfolio of nine apartments at Santry Cross, Dublin 9, generating €112k annually is for sale with a reserve of €1.3m. More than 100 commercial properties meanwhile will go up for auction on February 28. The Irish Independent, 8th February
Dublin Crane Count: The Irish Times monthly crane count survey has found there were 79 construction cranes visible over the centre of Dublin on 1st February, down one from the previous month’s total. This number is in contrast to the 34 cranes recorded when the newspaper began its survey in February 2016. Building work is still concentrated on the Southside of the city where there are 61 cranes, compared to 18 on the Northside. Clearance work is proceeding at pace at the 462k sq. ft. ESB headquarters on Fitzwilliam Street in Dublin 2. Building work is just underway on one of the last development opportunities left in the south docklands, an office scheme of 203k sq. ft. at the former An Post site behind the Bord Gais Theatre. The Irish Times, 6th February
Commercial Property Vacancy Rates: The latest GeoView Commercial Vacancy report found that the national commercial vacancy rate in Q4 2017 was 13.3%, only slightly lower than the 13.5% rate in the same period of 2016. Of the almost 212,000 commercial addresses in Ireland, more than 28,000 were vacant with 67.8% of those empty for more than three years. The greater Dublin area accounts for 33.2% of the overall national stock while the entire province of Connacht accounts for 13.7% and Ulster for 7.8%. The report highlights a continued imbalance between Dublin and the rest of the country with 15 counties registering higher vacancy rates than the national average in the last quarter of 2017. Sligo, Galway, Leitrim, Mayo and Longford had the highest vacancy rates while the lowest rates were recorded in Kerry, Meath and Wexford. Across Ireland, GeoView notes that 19,000 commercial units have been vacant for three years or more. The highest proportion of long term commercial vacancies in the State are in Monaghan, at 78.5%, followed by Laois, Limerick and Clare. The lowest long term vacancy rates are in Galway, Dublin and Westmeath, all ranging between 60.5% and 62.2%. The Irish Times, 13th February
If you have an article which you would like to have considered for inclusion in our next weekly report, please contact us at info@origincapital.ie