13th September (Issue 63)
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 SALES
Project Oyster: AIB is understood to be considering the disposal of a portion of its c. €1.8bn non-performing loan book which is secured by thousands of buy-to-let (BTL) investment properties. Should the bank proceed with the portfolio sale, then it would represent the quickest way of removing a substantial number of non-performing loans from its Balance Sheet. The Sunday Business Post, 11th September
Project Beara: Deutsche Bank has been chosen as the preferred bidder for NAMA’s c. €250m par value Project Beara loan portfolio. The loans are linked to the Shipton Group, which is controlled by the Love family from Cork. The underbidders reportedly included Goldman Sachs, Marathon Asset Management and Avenue Capital. Deutsche Bank has now acquired five loan books from NAMA, after previously acquiring Projects Arch, Boyne, Maeve and Spring. The Sunday Business Post, 11th September
Start Mortgages Portfolio: Bank of Ireland is to acquire a book of performing residential mortgages from Start Mortgages, an entity acquired by Lone Star in 2014. Start Mortgages was a subprime lender which had a loan book of c. €638m when Lone Star acquired the entity. All the loans sold to Bank of Ireland have been restructured by Lone Star, after previously being in default. The Sunday Times, 11th September
Irish Banks: New figures from the European Central Bank show that at the end of 2015, Irish banks still held over €50bn of non-performing loans (NPL). Ireland had a NPL ratio of c. 19%, which was well above the average NPL ratio of 7% for institutions which were regulated by the Single Supervisory Mechanism. Ireland has a NPL ratio of 44% for commercial real estate debt and 18% for household debt. The Irish Times, 12th September
RETAIL
Grafton Portfolio: Savills is inviting offers of €40m for the Grafton Portfolio, which consists of a block of retail and office units at the junction of Grafton Street and Duke Street in Dublin city centre. The portfolio is available to be purchased in a single transaction or else in two separate lots. The first lot is guiding €28m and consists of four adjoining properties at 21 – 23 Grafton Street and 24 Duke Street. The rental income of Lot 1 is €1.326m p.a., offering a net return of c. 4.46%. Lot 2 has an asking price of €12m and includes the former Creation Arcade, which is now a three-storey property which fronts onto Duke Street, Lemon Street and Duke Lane. Lot 2’s rental income of €625k p.a. will provide an initial return of c. 4.99%. The Irish Times, 7th September
Kennedy Wilson Assets: Kennedy Wilson has retained Savills to sell four retail investments in Dublin city centre where the cumulative asking price is c. €14.5m. The most valuable asset is the 3 store on Henry Street, which has an asking price of €8.25m. The four-storey property has a floor area of 2,979 sq. ft. and the rent is €425k p.a. Over €3.5m is being sought for a KFC takeaway on Westmoreland Street. KFC occupy the unit under a 20-year lease from 2013, which contains a break in year 10. The rent is stepped for the first four years, and the current rent of €180k p.a. will increase in October 2017. Offers above €1.9m are being sought for a Costa Coffee unit at 3 College Green, with Costa Coffee paying rent of c. €100k p.a. on a lease which has a break option in 2020. The final property for sale is a Paddy Power shop on Fleet Street. The property is for sale at over €850k and generates rental income of c. €47k p.a. The Irish Times, 7th September
OFFICE
Reflector Building: Savills has begun the marketing campaign for the office space of the Reflector building, the c. €100m project being undertaken by Park Developments in Dublin’s docklands. The property will feature c. 125,000 sq. ft. of office space, 40 apartments, a c. 3,500 sq. ft. retail unit or restaurant and will be located on Hanover Quay and Grand Canal Dock. Rents of €55 psf are being sought by Savills for the office space, which is due to be completed in Q3 2018. The Irish Times, 12th September
Navigation Square: O’Callaghan Properties has been granted planning permission by Cork City Council for a c. €90m office complex off Albert Quay in Cork city centre. The planning approval allows for the development of c. 310,000 sq. ft. of office space across four separate office properties, which will range in height from five to six storeys tall. The complex will also include c. 100,000 sq. ft. of basement parking space for cars and bicycles. The complex is expected to be completed by Autumn 2018 and should be able to accommodate c. 3,000 employees upon completion. The Irish Times, 12th September
Central Bank Portfolio: Lisney is to launch the sale of a portfolio of properties owned by the Central Bank in Dublin on October 19th. The properties going for sale occupy nearly a full city centre block with College Green / Dame Street to the south and Cope Street to the north. The three opportunities are to be offered for sale in individual lots. The first investment includes the Central Bank’s current HQ and two other blocks which are interlinked at basement level. The main building has a floor area of 83,393 sq. ft. while the Commercial building extends to 11,116 sq. ft. and the Annex building extends to 12,110 sq. ft. These properties are expected to attract bids of c. €65m. The second opportunity is a 23,029 sq. ft. office property at 6 / 8 College Green which is expected to attract bids of c. €14m. The final property for sale is at 9 College Green and should attract offers of c. €2m. The Irish Times, 7th September
155 Townsend Street: Colliers International is inviting offers of €7.5m for the former HQ of EBS, which is located at 155 Townsend Street in Dublin 2. The c. 0.3-acre site has redevelopment potential, with a recent feasibility study suggesting that it could facilitate a nine-storey property with either 119 hotel suites or 168 student accommodation beds. Another option is a seven-storey, 45,723 sq. ft. office property. The current property on site is a four-storey over-basement property extending to 24,369 sq. ft. The property is let to Anthony Nicholas Ltd at €450k p.a. on a five-year lease. The lease has a mutual break option at the end of year two and rolling mutual break options thereafter. The Irish Times, 7th September
South County Business Park: Three new office blocks offering a total of c. 290,000 sq. ft. of space are to be developed in the South County Business Park in Dublin 18. Joint agents JLL and BNP Paribas are quoting rents of €30 psf for the first block, One South County, which will have 140,000 sq. ft. of space. A number of car spaces are also available to rent at €2k per space. The O’Toole Partnership designed the One South County block. The Irish Times, 7th September
31 – 32 Lower Baggot Street: Savills is seeking offers of €3.3m for two Georgian properties at 31 – 32 Lower Baggot Street, Dublin 2. The properties have a floor area of 7,172 sq. ft. and include a mews to the rear. The properties are currently the HQ of Chuck Feeney’s Atlantic Philanthropies however they are available with vacant possession. The Irish Independent, 11th September
HOTEL
Ormond Hotel: Monteco Holdings has been granted planning permission by Dublin City Council to demolish and redevelop the Ormond Hotel on Ormond Quay in Dublin city centre. The projected cost of developing the five-storey, 121-bed hotel is c. €20m. Monteco Holdings hope to commence work on the site in early 2017 with a view to opening the hotel before the end of 2018. The Irish Times, 13th September
RESIDENTIAL / LAND
Mortgage Interest Rates: A new report by the Central Bank shows that the interest rate on all new floating rate mortgages in July 2016 was 3.11%. While this figure represents a 23bp decline YoY, it was significantly above the Euro Area rate of 1.82%. Once renegotiated mortgages are excluded, the weighted average interest rate on new mortgages was 3.49%. The number of family home customers opting for fixed-rate mortgages has grown over the past year, with 40% of all new family home mortgages in Q2 2016 being fixed-rate. Central Bank, Retail Interest Rates – July 2016
Cuirt na hAbhann: Cushman & Wakefield is guiding €5m for Cuirt na hAbhann, a mixed-use complex located on the outskirts of Galway city which contains 42 apartments and three ground floor retail units. The apartments consist of 24 two-beds and 18 one-beds, producing a rental income of c. €417k p.a. Only one of the retail units is let, providing additional rental income of €7.5k p.a. The Irish Times, 7th September
Galway Development: Bids in excess of €3.2m are being sought by TWM for 20 apartments and four commercial units in a 17,587 sq. ft. complex on Seamus Quirke Road, Galway. The 20 apartments consist of 12 three-beds and 8 two-beds and provide 52 student accommodation beds. Three of the four commercial units are let to Subway, Domino’s Pizza and the Irish Nurses’ Council. The total rental income is c. €272k p.a. The Irish Times, 7th September
Harristown Demesne: The selling agent Jordan Auctioneers is inviting offers of €25m for a 750-acre estate in Co. Kildare. Harristown Demesne dates back to 1768 when it was owned by the La Touche family. The main property extends to c. 6,000 sq. ft., whilst there are three lodges of c. 1,000 sq. ft. included in the sale. The main property is two-storeys tall and has nine bedrooms in total. The Irish Times, 8th September
Landenstown Estate: Sherry Fitzgerald Country Homes has set an asking price of €6.5m on Landenstown Estate near Sallins, Co. Kildare. The estate is for sale at a reduced price as the 8,528 sq. ft. property and two gate lodges on site are in need of full restoration. The properties are situated on a 338-acre site and were constructed in the 18th century. The Irish Times, 8th September
CSO Rental Figures: The latest figures from the CSO show that while annual inflation in Ireland was minus 0.1% in August 2016, the annual inflation rate in the private rental sector was 8.8%. Private rental inflation for the month of August was up 0.7%, while inflation for the 24-months ending in August 2016 was 20.3%. The CSO rental figures are based on new tenancies across the country. NAMA Wine Lake, 11th September
INDUSTIAL
Naas Enterprise Park: TWM is guiding over €2.5m for two adjoining units in Naas Enterprise Park (previously Toughers Business Park) in Co. Kildare. Units L2 and M1 are both let to single tenants. Unit L2 extends to c. 45,000 sq. ft. and is occupied by DSG Packaging Ltd, who is paying a rent of €170k p.a. under a lease which runs until 2023. Unit M1 is occupied by Roadbridge, who is paying a rent of €114,276 p.a. under a lease which expires in 2020. The properties are available to be purchased in one or multiple lots. The Sunday Business Post, 11th September
OTHER
Ballybrit Service Station: Cushman & Wakefield is inviting offers of €3m for Ballybrit Service Station in Galway city. The station is let on a 25-year lease from 2006 at €300k p.a. The lease contains upward only rent reviews every five years. The Irish Times, 7th September
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