15th March (Issue 37)
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
NAMA Loan Sales: NAMA is expected to proceed with the disposal of loans which have a par value of c. €6.3bn in the coming weeks. NAMA has retained Cushman & Wakefield to sell loans where the par value is €6bn but the market value is understood to be in the region of €500m. The loans were previously to be sold via two portfolio sales, Projects Emerald and Ruby, however they are now being sold as one portfolio. NAMA has also appointed KPMG to sell Project Abbey, which is a loan portfolio with a par value of c. €300m with the loans linked to the developer Pat Doherty. Following the sale of loan portfolios such as Projects Eagle, Jewel and Arrow in recent years, it is understood that less than 10% of the remaining loans held by NAMA are categorised as performing loans. The Irish Times, 13th March
RETAIL
Pairc an Clochair: DTZ Sherry Fitzgerald has set an asking price of over €17m for Pairc an Clochair in Oranmore, Co. Galway. Pairc an Clochair includes retail units let to Tesco (50,000 sq. ft.) and Aldi (18,000 sq. ft.), 1,000 car spaces, 8.9 acres of development land, Thatch Bar and Oranmore House. The development land can facilitate a number of uses including retail, office, hotel and a bar / restaurant. The current rent roll of the complex is c. €1.22m p.a., with Tesco (c. €906k) and Aldi (c. €272k) the key tenants. There is c. 10 years remaining on the Tesco and Aldi leases. The Irish Times, 9th March
OFFICE
The Oval: The German fund Patrizia has purchased The Oval development in Ballsbridge, Dublin 4 in an off-market deal for c. €140m. The Oval, which was developed in 2006 / 2007 by four Dublin-based investors, is fully let and generating c. €7.4m in annual rental income. The development comprises over 180,000 sq. ft. of Grade A office space, ground floor retail units and a gym. Over 59,000 sq. ft. of the office space and 50 car spaces are let to the state owned Eirgrid, on a 25 year lease from 2007. The office space in The Oval is let for c. €42 psf however this should increase as leases expire and rent reviews fall due. The Irish Times, 9th March
One Earlsfort Terrace: Hibernia REIT has completed the purchase of One Earlsfort Terrace for €19.2m. The property is located on the corner of Earlsfort Terrace and Hatch Street Lower in Dublin 2. In total the property comprises 21,700 sq. ft. of office space and 19 car spaces. The law firm Eversheds have leased the entire property until 2026, with upward only rent reviews scheduled for September 2016 and 2021. Hibernia REIT has advised that the current rent of €630k p.a. is set to rise to €1m p.a. (€45 psf) from September 2016, with the increased rent providing for a yield on cost of 5.3%. The Irish Times, 11th March
Project Pegasus: Johnny Ronan’s plan to develop a two-block office complex with c. 560,000 sq. ft. of office space in Ballsbridge, Dublin 4, has been formally objected to by An Taisce and a number of local residents. Mr Ronan intends to build the six-storey scheme, codenamed Project Pegasus, at the front of AIB’s Bankcentre, on a site which he purchased last year for €67.5m. An Taisce has objected on the grounds that the proposed development is excessive and that it would negatively impact the protected structures in the area. The Irish Independent, 9th March
Miesian Plaza: The OPW has signed a lease to occupy over 150,000 sq. ft. of Miesian Plaza in Lower Baggot Street, Dublin 2 for c. €60 psf. Miesian Plaza is owned by Larry Goodman and is currently in the final stages of a c. €100m redevelopment. Mr Goodman purchased the property through Parma Developments for €40m in 2013. Miesian Plaza was previously the headquarters of Bank of Ireland and was owned by a consortium including Derek Quinlan and Paddy Shovlin, who paid €180m for the property in 2008. The Irish Independent, 9th March
HOTEL
Waterford Marina Hotel: The Waterford Marina Hotel has been sold for €4m, c. 25% above the guide price of €3.2m being sought by the agents Christie & Co. The three star, 81 bed hotel is situated on the banks of the River Suir and was developed in 1997, with the previous owner Frontline Asset Management purchasing the hotel later that year. Dave Murray of Christie & Co has advised that the hotel is highly profitable with strong demand for accommodation in the area. The Irish Independent, 10th March
Christie’s Hotel Report: A new report from Christie & Co projects 2,000 new hotel rooms being developed in Dublin within the next five years. The introduction of these hotel rooms would increase Dublin’s supply level by 14% and the national level by 10%. Of the 2,000 new rooms, 198 will be provided by the opening of the Holiday Inn Express on O’Connell Street, which is expected to open this June. The lack of new development in recent years has meant that occupancy levels are now close to their ceiling, with occupancy rates for hotels in Dublin rising to 83.9% in 2015. The Irish Times, 9th March
RESIDENTIAL / LAND
Residential Rents: The latest quarterly report from the Private Residential Tenancies Board has revealed that rents in Dublin have surpassed the levels achieved during the peak of the boom in 2007. Rents in Dublin increased by 9% in 2015, with the average rents for houses and apartments rising by 9.5% (to €1,431) and 8.7% (to €1,314) respectively. Rents in Dublin are now 0.4% above their 2007 peak. On a national level, rents rose by 9.8% in 2015, however rental levels outside of Dublin are still almost 15% below the 2007 levels. The Irish Times, 15th March
Gardiner Street: The student accommodation developer Global Student Accommodation has announced that it will develop almost 500 student accommodation units on the former IDA site in Gardiner Street, Dublin 1. GSA will partner with Carrowmore Property on the project, with Carrowmore responsible for the construction of the complex. The project will be GSA’s second in Dublin after they obtained planning permission for a 400 bed complex last September in Newmarket, Dublin 8. The Newmarket complex is expected to cost c. €41m to develop. GSA hope to have the Gardiner Street development ready for September 2017. The Irish Times, 9th March
Shrewsbury Square: Hooke & MacDonald has set an asking price of €9.5m for the final 13 apartments in the 80 apartment Shrewsbury Square development in Ballsbridge, Dublin 4. The units consist of two one-bed apartments, valued at c. €500k each and 11 two-beds, valued at c. €773k each. The current rental income of the portfolio is €440k p.a., which will offer investors an initial return of 4.7%. Each of the apartments comes with its own underground car space. The Irish Times, 9thMarch
Corn Mill Development: Eoin O’Neill Property Advisers has set a guide price of €3.85m for 11 residential units in the Corn Mill development in Drumcondra, Dublin 3. The units consist of 10 three-bed townhouses and one two-bed apartment. The units are currently generating income of €221k p.a., with potential to increase this figure through active management. The Corn Mill development is well located and just a 20 minute walk from the IFSC. The Irish Times, 9th March
Mortgage Arrears: The latest figures from the Central Bank on mortgage arrears reveal that the number of mortgage holders in arrears for over two years fell by 1,400 in Q4 2015 to 36,500. While the number of mortgages in arrears for over two years has fallen, the value of these mortgages has risen by €124m to over €2bn. The average level of arrears per borrower was c. €57k. The Central Bank figures identified 121,000 mortgage accounts which are in some form of arrears. The Irish Independent, 11th March
Docklands Developments: Two companies linked to the developer Greg Kavanagh have sought planning permission for developments in Dublin’s south docklands. Balark Investments Limited has sought planning for 91 apartments, consisting of one, two and three bed units on Sir John Rogerson’s Quay. The application also includes a gym, parking and a community room at basement level. Separately, CreKav Landbank Investments Limited has sought to develop two adjacent six-storey blocks near Cardiff Lane. The first block would consist of a mix of office and retail space while the second would consist of ground floor retail with 47 apartments overhead. NAMA Wine Lake, 13th March
OTHER
Construction Activity: Ulster Bank’s Construction Purchasing Managers Index for February 2016 highlights the continued recovery in the construction sector, as the sector recorded its strongest increase since June 2000. The reading for February was 68.6, some 5.2 points above the January reading of 63.6. The 68.6 reading was also the highest reading ever recorded, with the previous best set in November 2004. Ulster Bank has however moved to manage optimism levels following the results, stressing that activity in the sector is still at a low level. The current level of output from the construction sector is c. 50% below the peak level achieved before the economic downturn. The Irish Independent, 14th March
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