14th March (Issue 87)
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
Lone Star Bond Issuance: The Irish Times reports that Lone Star is preparing to issue bonds secured by over €500m of residential mortgages. The issuance is expected to take place within the next few weeks and will be completed through an entity named European Residential Loan Securitisation 2017-PL1 DAC. A credit note from Moody’s, who Lone Star has hired to rate the bonds, states that 76% of the mortgages have been permanently restructured, 19% are in arrears and the average loan-to-value of the mortgages is 67%. The residential mortgages were originally underwritten by Bank of Scotland (Ireland), Start Mortgages and Nua Mortgages, between 2003 and 2008. The Irish Times, 8th March
RETAIL
Parkway Retail Park: Green REIT has agreed to sell Parkway Retail Park, Co. Limerick, to an unnamed entity for €24.3m, in a deal that is expected to be completed later this month. The price is to be paid in two tranches, with €1.3m subject to securing planning consent for a vacant unit on the site for which a tenant has been agreed. Green REIT announced that the contract price reflects a 4.4% uplift on the valuation obtained in December 2016, and a 74% profit for the company on the cost of acquiring the property in late 2013. The sale comes as part of a larger non-core asset disposal project by Green REIT, as it focuses on the Dublin office market. The Irish Times, 10th March
St Mary’s Road Properties: Colliers International is guiding in excess of €2.65m for a Victorian period property and coach house in Dublin 4. Numbers 1 and 1A St Mary’s road are being offered in two lots – Lot 1 (Number 1 St Mary’s Road) is let to ‘Callan & Co’ on a 21-year lease from January 2016, with an annual rent of €90k p.a. until January 2021, before increasing to €97.5k p.a., with open market rent reviews thereafter. The next break option on the lease is in 2027. The building, which is in extremely good condition, extends to 2,000 sq. ft. over two floors, and is available for sale individually with a guide price in excess of €1.7m. Lot two (The Coach House) is a two-bedroom Victorian property which extends to 860 sq. ft. and has a private garden and off-street parking for three cars. The Coach House is available for sale individually with a guide price above €950k and has full planning permission for a 615 sq. ft. extension. The Irish Independent, 12th March
Royal Hibernian Way: Friends First has been granted planning permission for two new restaurants in the well located Royal Hibernian Way shopping centre on Dawson Street in Dublin city centre. The restaurants will have floor areas of 2,390 sq. ft. and 3,898 sq. ft. and will contain external seating. The new units will mark the beginning of a more comprehensive refurbishment of the shopping centre by Friends First. Footfall on Dawson Street is expected to rise rapidly due to the new Luas Cross City service, and several leading traders are now seeking to lease floor space in the area. The Irish Times, 8th March
Dublin / Wicklow Retail Parks: Cushman & Wakefield is handling the sale of two retail parks in Dublin and Wicklow which are both well located close to Lidl supermarkets. Grange Road Retail Park in Rathfarnham, Dublin 14 is guiding €2.9m, while offers of €1.4m are being sought for Blacklion Retail Park in Greystones, Co. Wicklow. The Grange Road property for sale extends to 10,774 sq. ft. and has a rent roll of c. €309k p.a. Blacklion extends to 12,602 sq. ft. and has a rent roll of c. €150k p.a. The Irish Times, 8th March
Swords Plaza: Swords Plaza, an office and retail centre along Main Street in Swords, Co. Dublin has been sold for close to the €14.5m asking price to an American company. Cushman & Wakefield handled the sale of the freehold complex, which extends to 101,285 sq. ft. Based on the purchase price and the c. €1.556m annual rental income, the property will offer a return of c. 10.34%. Almost 70% of the rental income is secured against well-known local and multinational tenants including ASL Aviation (€361k p.a.), McDonald’s (€160k p.a.) and DHL (€142k p.a.). The Plaza occupies a pivotal location in Swords, adjacent to both the Pavilions and Swords Central shopping centres. Two-thirds of the buildings sold are in use as offices, while 26% is retail use. The remaining 7% comprises a double basement 315-space car park and two apartments. The Irish Times, 8th March
OFFICE
Seamark Building: Starwood Capital Group and Chartered Land are seeking tenants for the newly named Seamark Building, located on the Elmpark Green campus on Merrion Road in Dublin 4. Joint agents CBRE and Colliers International are quoting a rent of €39.50 psf, which represents a significant discount on rental prices in Dublin’s central business district. The eight-storey block, which has views over Dublin Bay, extends to 182,500 sq. ft. and once fully developed, can be split into two independent office buildings, or combined to provide one single HQ building. The property also comes with 161 car-parking spaces (which can be rented at €2,500 per space p.a.), 342 showers and changing areas. The mixed-use Elmpark campus contains facilities such as apartments, coffee shops, a child care centre and leisure facilities. The existing office tenants include companies such as Allianz, Novartis and Willis. The Irish Times, 8th March
Cork Office Development: CBRE is guiding €4.75m for a two-storey, 20,989 sq. ft. office building at Eastgate Avenue, Little Island in Cork, which has an up-to-date specification and contains 70 car parking spaces at surface level. The entire office is let to the Food Safety Promotion Board under a 25-year lease which expires in 2026. The rent is €370k p.a., offering a net return of c. 7.5%. The OPW has sub-let a portion of the ground floor on a 10-year lease running from 2016. CBRE expect significant interest in the sale due to the security of the income from a Government tenant and the good location of the building. The Irish Times, 7th March
Galway Office Building: CBRE is guiding over €8.5m for 6 Ard Oran, a 49,654 sq. ft. modern office block in Oranmore Business Park in Galway. The property, which is being sold on the instructions of a receiver, is currently rented to Cisco on a 25-year lease from 2007. The annual rental income is €774k, offering a net initial return of 8.72%. Cisco’s lease incorporates five yearly upwards-only rent reviews, and has 5.7 years to run until the next break option in November 2022. The building has a basement car-park with 99 spaces, and there are a further 42 surface car-parking spaces. The Irish Times, 7th March.
Dublin 8 Office Building: BNP Paribas is guiding €2.65m for the sale of The Priory, a six-storey period office building on John Street West, off Thomas Street in Dublin 8. The building was originally developed alongside a church in 1878, and was purchased in 2002 by its current three owners who invested heavily in converting and upgrading the office. The property extends to 10,021 sq. ft. and produces a rental income of €190k p.a. through several tenants. The Irish Times, 8th March
HOTEL
Mount Wolseley Hotel: Mount Wolseley Hotel, Spa & Golf Resort in Tullow, Co. Carlow is being offered for sale through agents CBRE for €14.25m. The resort is being sold by Tetrarch Capital, who purchased it in 2014 after it entered examinership with debts totalling €60m. Since then, Tetrarch has refurbished much of the premises, and returned the resort to profitability in 2015 and 2016. The 170-acre resort contains a 143-bed four-star hotel, modern conference and banqueting facilities, a spa, health club, gym and swimming pool. It also contains 16 four-bed lodges, and is being offered for sale either as one lot, or as two transactions (with the lodges being sold separately). The Irish Times, 8th March
RESIDENTIAL / LAND
Dublin Housing: The CEO of house builder Cairn Homes has warned that there is an “extraordinary imbalance” between the level of construction in the office and residential sectors in Dublin. Mr Stanley noted that while over 4.3m sq. ft. of offices are being constructed in the city, only 800 apartments are currently being built. While the office space would accommodate c. 40,000 workers, the apartments will accommodate just c. 1,600 people. He also advised that the company is planning to build between 375 and 400 houses this year (which will be sold in the low €300k bracket), with a total of 1,200 new homes planned by 2019. The Irish Times, 9th March
Goatstown Site: WKN Real Estate Advisors is seeking in excess of €10m for a 5.4 acre residential site on the Goatstown Road in Dublin 14. The site, which is being sold by The Religious sisters of Jesus and Mary, is expected to accommodate between 70 and 80 houses and apartments. The sale also includes a 0.41-acre site under a long lease with a restrictive covenant prohibiting any uses which are not childcare related. In addition, the buyer of the site will be obliged to deliver an astro-turf pitch for the Jesus and Mary College, rotated 180 degrees from its present position. The Irish Times, 8th March
Development Land Report: Cushman & Wakefield’s 2016 review of the development land market shows that there was c. €792m of direct and indirect development land sales in the Greater Dublin Area (GDA), Cork, Galway and Limerick. The total value of direct sales was c. €687m, spread across 180 transactions, a slight decrease on the 2015 figure of c. €721m. The GDA accounted for the majority of the direct sales, totalling c. €640m across 130 transactions. The indirect land sale in 2016 was Cairn Homes’ purchase of Argentum Property for €105.6m, a company which contained 164.5-acres spread across six GDA sites. Cushman & Wakefield Irish Development Land Review 2016 / Outlook 2017
Regulation Change: New legislation being drafted by the Department of Housing proposes to allow owners of vacant commercial property buildings convert their properties into apartments without obtaining planning permission. Under current legislation the owners of former shops or offices require planning permission to convert the properties into residential use. The Department of Housing is proposing to implement the exemption until 2021, but this may be extended if it is a success. The Irish Times, 10th March
Georgian Property Refurbishment: Larea Fa, a residential investment company, has bought 25 Georgian houses in Dublin in the last year, and is due to complete the purchase of a further 20 properties before the end of June 2017. The company is refurbishing the previously vacant properties, which are located in Dublin 4, 6 and 8 before putting them back into the market at a higher rent, and will mainly seek young professionals as tenants. The houses, which previously contained bedsits, are all classified as pre-1963 buildings. According to market sources, Larea Fa will spend over €40m acquiring the properties. The Sunday Times, 12th March
North Dublin Docklands Apartments: Ide Mulchay has sought planning permission from Dublin City Council to build two apartment blocks on a 0.3-acre site at Church Road in East Wall, 0.5km from the IFSC. The project will involve demolishing the existing buildings on the site, and constructing two blocks, between three and five storeys tall, which will contain 23 apartments (four one-bed; 15 two-bed and four three-bed apartments). NAMA Wine Lake, 12th March
Home Ownership: New figures from the CSO on home ownership shows that the number of people who own their own home in Dublin is the lowest since records began. The figures show that in Q3 2016, 59.9% of people in the capital owned their own home, a significant decrease from the 75% of people in Dublin who owned their home in 2000. Nationally, 69.7% of people owned their own home at the end of 2016, a figure which is significantly below the peak of 80.1% in 1991. The Irish Times, 14th March
Net Mortgage Lending: The latest figures from the CSO’s Trends in Private Household Credit and Deposits data show that net mortgage lending rose in Q4 2016 by c. €27m, the first net increase since 2009. While net mortgages for private homes rose by c. €449m, mortgages in the buy-to-let sector decreased by c. €394m. The data is also interesting in that it shows more people are favouring fixed rate mortgages. Fixed rate mortgages increased by €657m in Q4 2016, while variable rate mortgages decreased by €208m. The Irish Times, 14th March
OTHER
Amazon Data Centres: Amazon is planning to build a c. €1bn data centre campus in Dublin to meet demand for its web services and online shopping network. The company has applied to Fingal County Council for planning permission to construct a 223,000 sq. ft. data centre in Mulhuddart which will cost up to €200m. The company has advised that it may build up to seven additional smaller data centres on the c. 64-hectare IDA-owned site, which would involve an estimated future spend of c. €700m. Construction of this data centre is expected to take up to 18 months, employing about 400 workers on site. The company already has nine data centres located around Dublin which it uses both for its own internet operations and its web services business, which offers data hosting to other companies including Netflix, Expedia, Unilever and Kelloggs. The Irish Independent, 10th March
The Cuckoo’s Nest Site: DNG is guiding €4m for the 4.52-acre site of the Cuckoo’s Nest public house on Greenhills Road in Tallaght, Dublin 24. The site comes with permission for 39 three-bedroom houses, six two-bedroom apartments and commercial space. It is anticipated that the pub will be altered and renovated into an 11,000 sq. ft. facility, and that the Tallaght Theatre building will be demolished and replaced with a 4,000 sq. ft. property. The Irish Times, 8th March
An Post Closures: The Irish Independent reports that a plan by An Post to restructure the post office network is expected to require the closure of over 200 post offices. A separate government report had reportedly proposed that 80 offices be closed, with a further review of loss-making outlets to be conducted in four years’ time, however it is reported that An Post’s strategy would be to use any funds to restructure the business now, therefore meaning a higher number will be closed. It is expected that several post offices will be closed voluntarily, with An Post identifying further locations to be closed over an extended period. In addition to the planned closures, a significant number of post offices are reportedly due to be moved to convenience stores in villages in towns. Whilst cost-cutting is a key focus of the plans, there are also proposals to grow other parts of the business, including the rapidly growing parcel business, which currently has an annual turnover of €120m. The Irish Independent, 12th March
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