18th April (Issue 92)
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 Cypress: Goldman Sachs has agreed to pay c. €200m to acquire AIB’s Project Cypress loan portfolio, a purchase price which reflects a c. 50% discount on the portfolio’s c. €400m par debt. Project Cypress is a non-performing buy-to-let loan portfolio, with c. 1,500 properties serving as collateral for c. 1,200 borrower connections. The Irish Times, 14th April
RETAIL
Evans Store, Henry Street: After being the underbidder on several property transactions in Dublin over the last two years, international property manager AEW has purchased the high-profile Evans store on 42 – 43 Henry Street in Dublin city centre. The company has paid c. €20.5m for the investment, which had a guide price of €18m, and will offer a return of 4.2%. The property, which is located on the corner of Henry Street and Moore Street, is fully let to the Arcadia Group on a 35-year lease at a rent of €865k p.a., with c. 3.95 years left to run. The ground, basement and first floors are in retail use, with the upper floors being used as offices, storage and ancillary accommodation. The Irish Times, 12th April
Golden Discs, Cork: The Golden Discs store on 80 – 82 Patrick Street in Cork city centre has been sold to a family investment fund for c. €4m. The premises, which was owned for several years by the IPUT pension fund, is let to Golden Discs on a five-year lease until June 2018 at a rent of €200k p.a. The building extends to 2,260 sq. ft. at street level and 1,503 sq. ft. on the first floor, and was previously let to HMV at an inflated rent of €580k p.a. The Irish Times, 12th April
Central Park: Central Park, a mixed-use neighbourhood centre in Killarney, Co. Kerry, has been brought to the market by joint agents Cushman & Wakefield and Sherry Fitzgerald Coghlan with a guide price of €2.7m. The scheme, which is fully let, consists of nine retail units, three office units, seven modern two-bed apartments and 71 car parking spaces. There is c. 19,000 sq. ft. of accommodation, which is currently producing a rent roll of c. €230k p.a., however the selling agents believe this could be increased through additional asset management in the short term. The Irish Times, 13th April
OFFICE
Dublin Q1 2017: According to research from JLL, take-up of office space in Dublin was 11% higher in Q1 2017 than in the corresponding period in 2016. Q1 2017 saw 40 deals completed, resulting in c. 550,000 sq. ft. of office space being taken up, with technology companies accounting for 45% of new lettings. Technology firms such as Google, Oracle, Citrix and Informatica have all taken up space since January, while the public sector (accounting for 34% of take-up) was also particularly active, with the Office of Public Works and the Department of Social Welfare among those securing new office space. According to JLL, the overall Dublin vacancy rate in the office market is 8.9%, falling to 4.8% in central Dublin. However, JLL has highlighted an “impressive pipeline” of new office space coming on stream through development and refurbishment activity – currently 3.2m sq. ft. of office space is under construction in Dublin with delivery expected within the next 18 months, with 76% of this located in the city centre. According to JLL, based on office take-up over the last two years, the pipeline space will only meet one year’s demand, however the company point out that a further three years’ supply is in various stages of planning. The Irish Times, 12th April
25 Merrion Square: The sale of a Georgian building at 25 Merrion Square and 25 Denzille Lane, Dublin 2, to UK investors has been completed at a price of €3.8m, €300k above the guide price. The selling agents rented out the vacant mews building during the marketing campaign, pushing the rent roll out to €247k p.a. and the net initial yield to 6.2%. The tenants include DLS Capital Management, Tech Skills Resources and the Irish Red Cross. The property includes 17 car parking spaces. The Irish Times, 12th April
Kildress House: Kildress Property Company Ltd, which is controlled by Seamus and Gerard McAleer, has sought planning permission to develop a c. 35,000 sq. ft. office block in Dublin city centre. The application proposes to demolish Kildress House on Pembroke Row off Lower Baggot Street, and replace it with a new six storey block. NAMA Wine Lake, 16th April
HOTEL
Tetrarch Application: Tetrarch, through Brigante Investment Ltd, has sought planning permission from Dublin City Council for a c. €65m commercial development on a c. one-acre site which is bounded by Moss Street, Gloucester Street South and Townsend Street. The application seeks permission to develop a 393-bedroom hotel, a 202-bedroom aparthotel and a 21-unit apartment block. The application also proposes to develop a ground-floor restaurant on the site of the well-known Ned’s pub. The Irish Times, 15th April
Howl at the Moon: Dale Vision, which is associated with Paddy McKillen Jnr and Matt Ryan’s Oakmount, has sought planning permission to build a 53-bedroom hotel on Lower Mount Street in Dublin city centre. The hotel will be built on the site of the Howl at the Moon nightclub, which will be demolished under the plans to facilitate the development of the six-storey hotel. Oakmount reportedly paid c. €3.2m to acquire Howl at the Moon in the past year. The Irish Times, 18th April
RESIDENTIAL / LAND
New Mortgage Lending: New figures from the Central Bank show that c. €5.1bn of new mortgages were signed in the 12 months to the end of February 2017, representing a 16% increase YoY. Of this figure, €369m was signed in February 2017, representing an increase of 18% on the February 2016 figure. The weighted average interest rate on new mortgages in Ireland was 3.38%, well above the equivalent Eurozone rate of 1.80%. Quarterly data also shows that standard variable-rate mortgages saw the largest drop in PDH mortgage rates, falling 35 basis points to 3.40% in Q4 2016. The share of fixed-rate PDH mortgages fell during 2016, however it still accounted for c. 40% of all new PDH mortgages. Meanwhile variable buy-to-let (BTL) mortgage rates declined by 0.2% to stand at 4.71% at the end of Q4 2016. Central Bank of Ireland, Retail Interest Rates – February 2017
Dominick Street: Ziggurat ROI No 4 LP has sought planning permission from Dublin City Council to develop a five-storey, 77-bedspace student accommodation complex on Dominick Street in Dublin city centre. This application is reportedly linked to another application by Ziggurat ROI No 1 LP to develop a 444-bedspace student accommodation complex on North Circular Road. NAMA Wine Lake, 16th April
Ulster Bank Mortgage Rates: Ulster Bank has reduced its mortgage rates for both new and existing customers. Following the rate reductions, the bank will now offer a fixed rate of 2.9% where the loan is 60% or less than the value of the property. To avail of this rate, the balance of the mortgage must be at least €200k and the borrower’s salary must be mandated to an Ulster Bank current account. According to the bank, almost half of all new customers are opting for fixed rate mortgages. The Irish Independent, 17th April
INDUSTRIAL
Dublin Q1 2017: New research from CBRE shows that there was c. 546,000 sq. ft. of take-up of industrial space in Q1 2017, spread across 38 transactions (21 of which were lettings and 17 sales). The level of take-up in the quarter represents a decrease of 28% when compared to Q1 2016, which highlights the scarcity of quality stock in core locations. With prime rents steady at €8.75 psf, a level which is close to justifying new developments, CBRE expect to see increased appetite for speculative developments later in 2017. Prime yields remained steady at 5.5% at the end of the quarter. CBRE Dublin Industrial & Logistics MarketView, Q1 2017
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