19th September (Issue 114)
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
Danske Bank Loan Portfolio: Pimco and Bank of Ireland are believed to be amongst the four firms still in the running for Danske Bank’s €2bn retail loan portfolio, with final bids due on the 25th of September. The portfolio reportedly includes approximately 30,000 performing loans, 10,000 of which are mortgages tied to the borrower’s principal residence, while 5,000 are buy-to-let mortgages. It is expected the huge portfolio sale, the largest this year, will attract a full valuation given the book’s low level of arrears (less than 5%). A successful bidder will be selected shortly after final bids are received, with Danske and its advisors, Bank of America Merrill Lynch, aiming to close the transaction by December. The Irish Independent reports that AIB is not amongst the bidders for the portfolio. The Irish Independent, 13th September & 19th September
Project Zinc: The Sunday Business Post reports that NAMA is preparing to dispose of a portfolio of granular assets under an upcoming loan sale, Project Zinc. The book is believed to consist of a large number of smaller sized loans, with the security well dispersed geographically. The par value of the portfolio has not yet been disclosed. The Sunday Business Post, 17th September
RETAIL
Axis Portfolio: Offers in excess of €50m are being sought by Calibrate Real Estate Ltd for the Axis Portfolio, an investment portfolio which includes a commercial and residential development in Galway, a suburban shopping centre in Swords, Co. Dublin, and two well-located car parks in Dublin and Limerick. QRE is guiding offers in excess of €23m for Citypoint, which contains a mixture of retail, office and residential units overlooking Eyre Square in Galway, with a rental income in excess of €1.5m p.a. QRE are guiding €10m for Boroimhe Shopping Centre in Swords, which extends to 34,000 sq. ft. and produces rental income of €885k p.a., offering a net initial yield of 8.2%. The car parks for sale are the Grand Canal Car Park in Dublin’s Silicon Docks and Cruises Street in Limerick city centre. QRE is guiding more than €15m for the Grand Canal Car Park which contains 165 spaces beneath the Bórd Gais Energy Theatre, while the 340-space Cruises Street Car Park is expected to sell for more than €2m. The four properties are being offered for sale in a single lot, however according to the sales agents, the vendor will consider ‘exceptional bids’ on a lot by lot basis. The Irish Times, 13th September
The Supermarket Collection: Agents TWM are guiding €49m for a portfolio of four supermarkets in Gorey (Co. Wexford), Sandyford (Co. Dublin), Roscrea and Cahir (both Co. Tipperary). Two of the supermarkets are operated by Tesco with the other two rented by Aldi. The Supermarket Collection portfolio extends to 172,000 sq. ft. and the units generate a combined rental income of €3.41m p.a. The weighted average unexpired lease term of the units is c. 11.35 years. The guide price will offer a net initial return of 6.67%. Approximately 74% of the rent roll, which is linked to changes in the Consumer Price Index, comes from Tesco, with the remainder coming from Aldi. TWM have advised that the vendor will accept offers for a combination of assets as they don’t have to sell the portfolio as a single package. The agents also highlight that the portfolio may be of interest to pension funds, due to the rents being linked to the Consumer Price Index. The Irish Times, 13th September
Tesco Newry: A private investor has purchased the Tesco Extra in Newry, Co. Down from Aberdeen Standard Investments, for £27m (€29.7m). The 94,000 sq. ft. store is let to Tesco on a 25-year lease from 2013 at a rent of c. £1.59m p.a. The store is located on the northern periphery of Newry, close to a busy residential and commercial area. The Irish Times, 13th September
The Arcadia Centre Athlone: Savills is guiding €4.4m for a retail park and neighbourhood centre in Athlone, Co. Westmeath. The Arcadia Centre contains seven retail units (four of which are held on long leasehold), a 52,000 sq. ft. B&Q store and garden centre and a petrol station. 500 car spaces are included in the sale of the centre, which is situated on a 9.2-acre site. The Irish Times, 13th September
Galway High Street: Cushman and Wakefield have been retained by Aiden Murphy of Crowe Horwath to bring 6 – 7 High Street in Galway city centre to the market, with a guide price of €2.5m. The large retail unit extends to 7,287 sq. ft. and is occupied by two retail tenants. The current rental income of €203k p.a. is split between Kilkenny Design (25-year lease from 2002 – €155k p.a.), Ladbrokes (35-year lease from 1987 – €40k p.a.) and a telecommunications mast (€8k p.a.). Aiden Murphy was appointed as receiver over the property by NAMA. Crowe Horwath, 14th September
Card Factory Irish Entry: UK greeting card specialist Card Factory is to enter the Irish market by opening six shops in Ireland by October. The company is to open units at Northside Shopping Centre, Drogheda Town Centre and the Courtyard Shopping Centre in Newbridge, as well as high-street stores in Ashbourne, Dún Laoghaire and Naas. The company is hoping to open a further 69 outlets in Ireland over the next five years. The Irish Times, 13th September
OFFICE
Dublin Landings Sale: NAMA and the developer Oxley are preparing to sell the first portion of the new Dublin Landings project in Dublin’s docklands for c. €150m. It is understood that the two parties have signed a memorandum governing the sale, which covers block one of the new development, which will house the NTMA when it moves from its current premises. The NTMA is due to pay a rent of €50 psf for the new building, which will extend to c. 143,000 sq. ft. The entire Dublin Landings development will provide 1m sq. ft. of office space and almost 300 apartments upon completion. It is believed that later phases of the development are also likely to be forward-sold during construction as they are pre-let. The Sunday Business Post, 17th September
Beaver House Clonskeagh: A fully-let office investment in Clonskeagh in Dublin 4 is on the market though agent Knight Frank with a guide price of €8.75m, offering a net initial yield of 5.58%. Beaver House at Beech Hill is a recently refurbished three-storey building extending to 29,483 sq. ft. with 90 car spaces. It generates rental income of €528k p.a., with a weighted average unexpired lease term of c. 6.5 years. Maxim Integrated occupies 66% of the space on a 15-year lease from 2015 (with a break option in 2025) at a rent of €315k p.a. The remaining space is let to Pinergy on a ten-year lease from July 2010 at €140k p.a. and Jefferson Payroll, who rent a ground floor suite on a ten-year lease from January 2017 at 18.50 psf. The Irish Times, 12th September
Unit 30 Cork Airport Business Park: Savills is guiding €7m for Unit 30 at the Cork Airport Business Park. The two-storey property has a floor area of more than 48,000 sq. ft., with 24,000 sq. ft. vacant on the ground floor. The first floor is occupied by BNY Mellon on a 20-year and one-month lease from 2006, with BNY currently paying €341k p.a., although the lease is subject to rent reviews every five years. Based on the guide price, the property has a capital value of €145 psf and offers an equivalent yield of 8.97%. The Irish Examiner, 14th September
Communication House: Communication House, an office building located in Dublin 4, is for sale for €6.7m through agents Cushman & Wakefield, offering a net initial yield of 6%. The three-storey over basement building extends to 9,636 sq. ft. and is arranged in two blocks connected by a central core feature tower. 17 car spaces are included with the property. It is let in its entirety to International Telecommunications Ltd on a 25-year fully repairing and insuring lease from 1999, with an annual rent of €420k p.a., with the next five yearly upwards-only rent review due in January 2019. The property is located close to Google’s European HQ on Barrow Street and a short walk from Grand Canal DART station. The Irish Times, 13th September
5 Earlsfort Terrace: IPUT plc is planning to spend c. €20m refurbishing 5 Earlsfort Terrace in Dublin 2, and has appointed Savills and CBRE to seek new tenants for the property. The building, which was the former offices of the law firm Arthur Cox, is situated beside the Conrad Hotel and opposite the National Concert Hall, and contains 66,000 sq. ft. of Grade A office space. The refurbished premises will be available from mid-2018, and Savills and CBRE are quoting rent of €57.50 psf., which would equate to rental income of €3.8m p.a. There will also be 50 car spaces and capacity for 70 bicycles at basement level. The Irish Times, 14th September
10 – 12 Hanover Quay: Kennedy Wilson is planning to convert a vacant warehouse at 10 – 12 Hanover Quay into high-tech office space. If planning permission is granted, Kennedy Wilson would be able to create four floors of office space, with the size of the building increasing to c. 79,000 sq. ft. The property backs onto the Capital Dock office and apartment scheme being developed by the group. The Sunday Times, 17th September
HOTEL
Carton House: First round bids are due for the Carton House Golf Resort near Maynooth in Co. Kildare, which is on the market with a c. €60m guide price. The Irish Times reports that bids are expected from a number of wealthy Irish families, along with several international investors. The property is being sold on behalf of the Mallaghan and Kelly families by CBRE, and includes a 165-bedroom four-star hotel and two championship golf courses. The Irish Times, 12th September
Clarion Hotel Liffey Valley: Dalata has acquired the long leasehold interest in 33 suites in the Clarion Hotel Liffey Valley for €8.58m. The 33 suites are the equivalent of 99 bedrooms, and further increase Dalata’s ownership stake in the hotel. Dalata completed the acquisition of the core of hotel this month, which included 158 bedrooms, the leisure centre, car park and two vacant retail units. The Irish Times, 19th September
Dublin City Centre Hotel: The Dolphin, an entity registered by KPMG in 2015, has sought planning permission from Dublin City Council to add 121-bedrooms to a planned hotel development between Aungier Street and Bow Lane in Dublin city centre. There is already planning permission in place for a 190-bedroom hotel, therefore if the latest application is approved, the proposed hotel development will increase to 311-bedrooms. NAMA Wine Lake, 17th September
Trinity Street Hotel: Torchglen Ltd has sought planning permission from Dublin City Council to develop an eight-storey, 38-bedroom hotel on Trinity Square in Dublin city centre. Torchglen is controlled by Paul Esajian, Jeffrey Carter, Colm Gunne and Gerard Conlon. NAMA Wine Lake, 17th September
RESIDENTIAL LAND
The Elysian Cork: The Sunday Business Post reports that the US fund Blackstone is preparing to put two of its Cork assets on the market in the next month, with an expected cumulative guide price in excess of €100m. The assets are the Elysian apartment block in Cork city centre and a residential development in Ballincollig, a suburb near Cork City. The 71m-tall Elysian apartment block is fully let and consists of a number of luxury apartments, with a three-bedroom apartment commanding a rent of up to €3k per month. The Elysian is also Ireland’s tallest building. The Sunday Business Post, 17th September
Connolly Station Site: CIÉ is seeking offers through agent Knight Frank to redevelop nearly seven acres adjoining Connolly Station and the IFSC in Dublin. The site is being offered under a development agreement subject to an annual site licence fee, followed by the higher of a premium rent or an income sharing arrangement with the preferred bidder. The site could provide an opportunity to develop a scheme integrated with Connolly Station. The site is being offered in two parts – the first extends to c. 4.85 acres and contains the CIÉ car park, CIÉ Group buildings and part of the railway sidings, while the second site extends to two acres and essentially covers the airspace above the remaining railway sidings and depot building. There is currently planning permission (until 2022) for a mixed-use scheme on a larger site, of which the sites for sale forms part of. This would include 540,000 sq. ft. of office space, 70,000 sq. ft. of retail / restaurant accommodation, a 101-bedroom hotel and 106 apartments. A feasibility study by Reddy Architecture suggests a 665,000 sq. ft. scheme may be possible on the 4.85-acre site, with a further 70,000 sq. ft. over the two acres of railway sidings. The site for sale is outside of the Docklands SDZ, however the current city development plan identifies it as one of four areas where buildings in excess of 50m in height may be permitted. The Irish Times, 12th September
Lansdowne Place: Joint agents Sherry Fitzgerald and Savills are bringing phase two of Lansdowne Place to the market. Lansdowne Place is a 217-unit residential development on the 6.8-acre site of the former Berkeley Court and Jurys hotels in Dublin 4. Phase two consists of 23 units and includes three penthouses, which are guiding €2.15m, €3.65m and €6.5m respectively. The Irish Times, 14th September
Montebello Killiney: Savills are guiding €9m for Montebello, a seven-bedroom detached mansion on Killiney Hill Road in south Dublin. The Victorian property dates from the 1870s and extends to almost 8,000 sq. ft. on four acres of secluded, pristine grounds. The property includes the original house, a detached 850 sq. ft. gate lodge, stable blocks, a swimming pool, an orchard garden and an octagonal pavilion. The Irish Times, 14th September
Dundrum Apartment Portfolio: Finnegan Menton are guiding €7.7m for a portfolio of 25 high-end apartments in Dundrum, south Dublin. The 18 penthouses and seven two-bedroom apartments are located in the Rockfield and Riversdale schemes beside the Balally Luas stop in Dublin 16. Based on the quoted price, the penthouses would have an average unit price of €330k, while the two-bedroom apartments would have an average price of €250k. Finnegan Menton advise that that this represents a strong discount on market rates due to it being a portfolio sale. The penthouses, which are two-bedroom plus study units, are rented at €1,825 – €2,100 per month, while the two-bedroom apartments are rented at €1,050 – €1,500 per month. Three of the units are currently vacant, as these are being used as show units. Therefore the current rental income of c. €460k p.a. is expected to increase to c. €536k p.a. when the portfolio reaches 100% occupancy. The Irish Times, 13th September
Rathgar Site: An infill residential site in Rathgar, Dublin 6 with potential to be redeveloped into a high-end apartment scheme is on the market for €5m through joint agents Knight Frank and JP & M Doyle. The site includes a family home and guesthouse which is situated on a 0.5-acre site. One of the properties, Ardagh House, is a 23-bedroom detached guesthouse which extends to 9,500 sq. ft. over three floors on a 0.3-acre site. The selling agents believe the property has potential to be converted or redeveloped into luxury apartments, subject to planning permission. The second building, The Beeches, is a detached, four-bedroom house which extends to 1,800 sq. ft. over 0.2-acres. The 0.2-acre site has planning permission to be redeveloped into two six-bedroom apartments over three floors. The Irish Times, 12th September
Dublin Docklands Site: Knight Frank are guiding €2.5m for an infill residential site in the heart of Dublin’s south docklands. The site extends to 0.47-acres and is zoned for residential purposes, and could accommodate either a high-end scheme of 14 townhouses, or a duplex / apartment / townhouse development of 22 units. Surface car parking can be included with both development options. The Irish Times, 12th September
Kildare Residential Site: Jordan Auctioneers is guiding €2.3m for a 13-acre site on the Temple Mills estate, close to the Main Street in Rathangan, Co. Kildare. The site comes with planning permission for 99 houses, with 50 houses having already been completed at the estate. The Irish Times, 13th September
H1 2017 Development Land: The latest report from Cushman & Wakefield on the Irish development land market shows that there were c. €220m of transactions in H1 2017 in the Greater Dublin Area, Cork, Galway and Limerick. This figure is well below the €380m of transactions recorded in the same period in H1 2016. While the cumulative value of the transactions was down YoY, the number of transactions rose substantially, with the 115 deals closed in H1 2017 reflecting a 27% increase YoY. Although the cumulative value of transactions closed was low in H1 2017, the value of transactions which were sale agreed at the end of H1 2017 was c. €450m, with the Greater Dublin Area accounting for c. €420m of this figure. Cushman & Wakefield, Irish Development Land Market Q2 2017
Glenveagh Properties IPO: The Irish Times reports that Glenveagh Properties, the new Irish homebuilder backed by Oaktree, is poised to raise €450m through its upcoming IPO. The company will combine development land acquired by Oaktree with the assets of the developer Bridgedale, and is expected to float next month on both the Irish and London stock exchanges. It had originally targeted raising €350m through the IPO, however this figure has been revised upwards after company executives received positive feedback from potential investors, according to sources. The revised IPO size would exceed the €440m raised by Cairn Homes when it floated in June 2015, and the company would be the first Irish homebuilder to debut on the stock market in almost two decades. Market sources advised in July that the new company will contain up to €100m of assets initially rolled in by Oaktree and Bridgedale, as well as further land purchases agreed in recent months, conditional on the IPO being executed. Oaktree is expected to have a stake of less than 20% in the company at the time of flotation. The Irish Times, 13th September
NAMA Affordable Housing Role: The Irish Times reports that Taoiseach Leo Varadkar has signalled that the Government may turn NAMA into a state-owned housing developer to cover the gap left by private sector developers. Under plans which are still being developed, NAMA would be transformed to focus solely on developing land and delivering affordable housing, by raising finance, becoming involved in the planning process and working with developers. It is understood that preparatory work on the initiative suggests amended legislation will be required to give NAMA this new remit, however sources familiar with the proposal believe the agency would be able to focus on new housing immediately. NAMA has already entered into partnerships with some developers, with its JVs scheduled to deliver 20,000 new homes by 2020. NAMA, in its current form, is due to be wound down by 2020, but there are some indications that this could be fast-tracked to take place in 2018. The Irish Times, 14th September
AIB Mortgage Rate Reduction: AIB has announced a 0.25% cut to its standard variable mortgage rate, which will benefit c. 100,000 customers. The bank has also added to its fixed-rate product offering, with a new seven-year fixed term at 3.5%. This move is accompanied by reductions across fixed rate products, including a 0.5% reduction on the five-year fixed rate. The fixed-rate changes came into effect on the 18th of September, while the standard variable rate and loan-to-value changes will apply from the 1st of November. The Irish Times, 15th September
Central Bank lending figures: New lending figures from the Central Bank have shown that new lending of mortgages for principle homes increased by €182m by the end of Q2 2017, marking the fifth consecutive quarter of growth. The statistics show that borrowers are increasingly leaning towards fixed-rate contracts due to the low interest rate environment. The level of lending on floating rate loans dropped by €612m over Q2 2017, attributed to the decrease in tracker mortgages and standard variable rate mortgages. Mortgages on investment properties also decreased over the quarter by €239m, meaning that total lending for house purchases remained negative in H1 2017. Compared to last year, the level of lending for BTL mortgages has fallen by 8.6%, or €1.2bn. Overall in Q2 2017, drawdowns on mortgages exceeded repayments by €794m. The Irish Times, 15th September
Mortgage Arrears: New figures from the Central Bank have shown that mortgage arrears continued to fall in Q2 2017. The figures show that 73,706 family home mortgages, or c. 10% of all family home mortgages, were in arrears at the end of Q2 2017, a decline of 3.6% compared with the Q1 2017 figure. The number of family homes in arrears over 90 days was 51,570, or 7% of all mortgages. However this figure is also decreasing, with a quarter-on-quarter decline of 2.5% marking the 15th consecutive quarter showing a decline. On the investment side, 19% of buy-to-let mortgages were in arrears at the end of Q2 2017, with those in arrears over 90 days decreasing by 1.9% over the quarter. However, c. 14,000 investment mortgages were in arrears by over 720 days, with an outstanding balance of c. €4.1bn. The figures also show that non-bank entities, including private equity funds, now hold 48,199 mortgage accounts, accounting for 6.5% of all mortgages in the country, and 5% of family homes. The Irish Times, 12th September
Vacant Site Levy: The proposed vacant site levy of 3% which is expected to be introduced by the Government in the forthcoming budget may be increased, after the Economic and Social Research Institute advised that a 3% levy would not be enough to deter developers from sitting on sites. While The Sunday Times references one Government source as saying that the levy may be set between 6% and 10%, it is believed that a 5% rate is most likely. The Sunday Times, 17th September
IFSC Development: Sian Walsh has sought planning permission from Dublin City Council to develop a three-to-four storey residential development which will consist of 14-units on Church Street in Dublin’s IFSC. The units will accommodate eight one-bed duplexes and six two-bed apartments. NAMA Wine Lake, 17th September
OTHER
Ballycoolin Data Centre: The Singapore-listed Keppel DC REIT has acquired a data centre in Ballycoolin business and technology park in Dublin 15 for €66m. The purchase of the 25,200 sq. ft. data centre is the company’s second venture in Dublin. Over 87% of the data centre has been leased. The data centre, which was previously owned by Dataplex, is currently more than 87% leased. The Irish Times, 13th September
The Mercantile Group: Danu Partners has exited the Mercantile Group by selling its stake to the majority shareholders for over €10m. As a result, the Mercantile Group, which is deemed to have a net asset value of c. €50m, will now be owned outright by EMI-MR. Following the completion of the transaction, the chief executive of the Mercantile Group, Pat Burke, has stated that the company would now push ahead with a €28m investment plan, including a redevelopment of the Mercantile Hotel. All projects other than the Mercantile Hotel are expected to be completed by Easter 2018. The Irish Independent, 17th September
Mitchelstown Living Health Clinic: The Sunday Times reports that Glencar Medical has agreed to acquire the Mitchelstown Living Health Clinic in Co. Cork for c. €9m. Glencar is believed to have acted on behalf of Valley Healthcare, a fund backed by Australian investor AMP and the Irish Infrastructure Fund. The Sunday Times, 17th September
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