13th July (Issue 305)
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.
INDUSTRIAL
North City Business Park Rohan Holdings has pre-let a 25,000sq ft warehouse at its North City Business Park development to global pharma and life sciences company Bio-Techne Corporation. The tenant, established more than 40 years and headquartered in Minnesota, is an acknowledged leader in the provision of life science tools and diagnostic re-agents with annual revenues of about $740 million. The company will use the new facility, which is due for completion later this year, as the primary distribution hub for its European customer base. Rohan Holdings is currently also building an adjoining 20,000sq ft unit at North City Business Park which it intends to make available for occupation from November at a rent of €11 per sq ft. The developer expects to commence work shortly on the next phase of the scheme, with a view to offering some 45,000sq ft of space to the letting market by the end of the first half in 2022. The Irish Times, 7th July
MIXED USE
Hospitality Sales The Hill 16 pub together with six overhead apartments in Dublin City centre is among a number of hospitality venues which are being offered separately for sale by Bagnall Doyle MacMahon this week. The Hill 16 pub and apartments comprise the entire of 28/30 Middle Gardiner Street, Dublin 1 and have a €2.25m plus guide price. All seven units are currently vacant but John Ryan, of Bagnall Doyle MacMahon, says the overhead apartments have potential to generate €130,000 per annum and the pub could generate €70,000 per annum. Also in Dublin 1, Bar Italia is an investment property which will be auctioned through the Offr platform on July 29 with a €750,000 guide price. It comprises a restaurant premises which extends to 2,300 sq ft over ground and basement levels. Its tenant, Acrobat Catering has a 25-year lease from August 2004. The passing rent is €91,224 per annum. Irish Independent, 8th July
RETAIL
Dublin Airport DAA is seeking interest from retailers to operate a health and beauty store which may generate an estimated €25m in sales over the contract’s lifetime in Terminal 2 of Dublin Airport after the previous occupant left due to the pandemic. According to tender documents, the owner of both Cork and Dublin airports is looking for expressions of interest to manage and operate a health and beauty unit in Dublin Airport Terminal 2 on a concession basis. On the Government’s e-tender website, DAA has estimated the concession may generate €25m in sales for the operator during the contract’s lifetime, which could run for five-seven years. In 2019, the unit generated around €5.5m in sales. Sunday Independent, 11th July
RESIDENTIAL / LAND
Marino, Dublin 3 US-headquartered property giant Greystar is closing in on the purchase of 342 homes being developed by Cairn Homes on a site at Griffith Avenue in Marino, Dublin 3. While the terms of the transaction have yet to be fully agreed, the parties are understood to be in the advanced stages of discussions with a view to completing a deal at just under €180 million for the Griffith Wood portfolio. The proposed price tag equates to an approximate average of €523,391 per unit. The scheme, which is currently under construction, is set to accommodate a total of 385 units, comprising a mix of 377 apartments and eight houses. The apartments will be distributed across seven blocks ranging in height from four to eight storeys, and will be complemented by the provision of 367 car parking spaces, 682 bicycle parking spaces, as well as a creche and a gym for residents. The 35 apartments and eight houses not included in the Greystar deal meanwhile will be acquired by Dublin City Council for social and affordable housing under the terms of Part V of the Planning and Development Act. The Irish Times, 7th July
Project Haven The prospect of immediate rental income copper-fastened by the security of a 25-year government lease is understood to have seen strong interest in the sale of Project Haven, a portfolio of approximately 60 social housing units across Dublin’s north, south and west suburbs. Following the receipt of offers from a number of parties, UK-headquartered investment manager Alpha Real Capital is understood to have been selected as the preferred bidder for the portfolio at a figure, which sources said is “just ahead of the guide” of €21 million set by agent CBRE on behalf of Allied Irish Property and the Topland Group. Each property within the portfolio has been fully refurbished and let by way of a standard lease for a term of 25 years, directly to the relevant local authority in each area. Index-linked rent reviews are provided for in every third year. The portfolio is generating gross rental income of €952,000 per annum currently. The Irish Times, 7th July
Social Housing The government’s plan to lease 2,400 homes from institutional funds this year will cost close to €1 billion in total over the 25-year term of the deals. New figures provided to the Business Post by the Department of Housing have shown that the state will spend nearly €1 billion in rent on the 2,400 homes due to be leased this year. Once the 25-year lease period is over, they will ultimately not own the homes at the end of the tenure. In the first quarter of this year, the state entered deals to lease 284 homes on a long-term basis from investors at an average rent of €15,073 per unit annually for 25 years. These 284 homes will cost more than €107 million, or €376,825 per unit, over the lifetime of the lease deal. As similar deals are likely to be involved in the case of the other 2,100 homes, the full amount in leasing cost will be about €1 billion. The Business Post, 11th July
OFFICE
Colony Portfolio The withdrawal of US investor Colony Capital from the Irish property market continues apace with no less than four sales currently nearing completion or concluded. Having already received €292 million last April from the sale to Blackstone of its 74% controlling interests in the Burlington Plaza office complex on Burlington Road and the headquarters of Three Ireland on Sir John Rogerson’s Quay, Colony is now eyeing an additional €120 million from asset disposals in Dublin 4 and the city’s south docklands. While the respective sales of Carrisbrook House, Donnybrook House and the former City Arts Centre site continue to advance, The Irish Times understands that real estate investor Mel Sutcliffe’s Quanta Capital has acquired 23 Shelbourne Road in an off-market deal. Colony and its joint venture partners, the British property group U + I, offered the property to the market quietly last year at a guide price of €25 million, and are understood to have secured in the region of that figure. In the case of Donnybrook House meanwhile, it is understood that the Irish property investment and development group, MM Capital, has secured preferred bidder status with an offer of about €25 million. The Irish Times, 7th July
Lisney Office Market Research Second quarter analysis conducted by Lisney has revealed that the Dublin office market began to operate more freely in Q2, albeit coming from a very low base. “While transactions remained relatively low, the amount of accommodation reserved grew over the quarter and is a positive indicator for activity in the second half of the year and into 2022,” said Lisney director and head of research Aoife Brennan. The vacancy rate has increased by 3.7% annually as grey space and newly completed buildings add to supply. Rents generally remained stable in Q2 and for Dublin overall are down by just 4% annually. According to Lisney, the third lockdown continued to have an impact on the market in Q2 with transactional levels remaining light at just 15,100 square metres; albeit this was a significant improvement on the 1,870 square metres taken up the previous quarter. The list of reserved deals grew in the three months to stand at approximately 86,100 square metres at the end of June with almost two thirds of that being in the city centre. Domestic occupiers took the majority of space, at 54% of the total. In spite of the international travel restrictions, there were 13 deals done by overseas companies including eight from the US. The Business Post, 7th July
Savills Office Market Research Enough office space to accommodate 30,000 people will be completed in Dublin this year, according to estate agency Savills. The 196,000 sq m of space across 33 office buildings represents a 35% increase on the amount of space that came to the capital’s market last year. The extra space comes despite the likelihood that many office-based workplaces are likely to adopt hybrid employment models after the pandemic, with staff splitting their working time between their homes and offices. Savills said that 77% of the new offices coming on stream this year in Dublin have already been pre-let. And of the 198,000 sq m of office space due to be delivered in 2022 in the capital, 50% has already been pre-let, according to the property firm. Irish Independent, 9th July
Ronan Group Johnny Ronan has a new business partner to deal with in his long-running quest to build two large towers in central Dublin. Colony Capital, the US firm, has struck a deal to sell its real estate portfolio in Ireland to Fortress Investment Group, a US-based investment firm, including its stake in the planned 45-storey tower as part of Project Waterfront and 22-storey Aqua Vetro tower on Tara Street. Fortress, which is ultimately owned by the Japanese investment giant SoftBank, controls $53.1 billion in assets worldwide. Fortress has announced that it has entered into a “definitive agreement” with Colony Capital to take control of approximately $2.7 billion in combined assets. As part of the agreement, Fortress will acquire Colony Capital positions in non-digital real estate, which includes positions related to a portfolio of approximately 40 positions encompassing over 100 properties in Europe and the US. The Business Post, 11th July
OTHER
West Waterford Some two years after initially hitting the market priced at €1.5 million, the West Waterford Golf Club has returned to market as a receivership sale guiding €1.2 million. The 148-acre course in Dungarvan is on offer with full vacant possession through Colliers Ireland, on the instruction of Ken Tyrrell of PWC. The property will be auctioned online on Thursday, July 29. The course was converted from farmland in 1991 with little alteration to the natural topography, leaving a new buyer with two options: maintain it as a golf course, or revert the land to farm land use. Of the 148 acres on offer, only about two acres have been used as the clubhouse, car park and access avenue. Of the remaining 146 acres, some 25 acres comprise various strips of valuable woodland (for which a valuation is available), made up of mainly spruce close to maturity fringed by hardwoods. The balance of land is currently in use as a golf course which would readily revert to farmland, having only been treated with environmentally-friendly fertilisers. The business is profitable and can be sold as a going concern, according to Colliers director Marcus Magnier. The Business Post, 11th July
Clondalkin, Dublin 22 TikTok, the Chinese social media giant, has selected Echelon’s campus in Clondalkin in Dublin as the site for its €420 million Irish data centre. The Echelon data centre campus, which is set on a 35-acre site in Dublin 10, is due to be operational by the end of this year when the first data halls are opened. A number of industry sources have confirmed to the Business Post that TikTok will house its European data centre at the campus when it opens later this year. The firm announced plans in August last year to locate a data centre in Ireland to store videos, messages and other data generated by its European users. Echelon, which is led by chief executive Niall Molloy, secured an investment of €1 billion from Pioneer Point Partners and Davidson Kempner in 2019 to build its hyper-scale data centre campus in Clondalkin as well as a second campus in Avoca, Co Wicklow. The Business Post, 11th July
VHI Portfolio VHI has taken a €4.5 million hit on its property portfolio, blaming the pandemic and the trend towards working from home for depressing office valuations. Much of the write-down is believed to relate to the health insurer’s headquarters on Abbey Street in Dublin, which were recently refurbished and extended to incorporate a 150-year-old former church, encasing it in a glass structure. VHI had valued its property assets at €72 million before the write-down. The property impairment comes just weeks after An Post wrote down the value of its GPO head office on nearby O’Connell Street to zero, with the historic building left largely vacant as staff work from home. The Sunday Times, 11th July
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