24th January (Issue 80)
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.
LOANS / PORTFOLIO SALES
European Loan Sales: According to US investment bank Evercore, Ireland was the top European country for distressed loan sales for the fourth consecutive year in 2016, fuelled by NAMA’s ongoing loan sales and a large Ulster Bank portfolio sale. 2016 saw c. €12.1bn of Irish loans sold, accounting for almost a quarter of total European loan sales. However, the level of Irish sales declined significantly from the c. €23.3bn of sales in 2015. Cerberus was the most active buyer of loans across Europe for the third year in a row, driven by purchases from NAMA, Ulster Bank and Permanent TSB. Evercore predicts that investors will continue to monitor Ireland due to the possibility of further NAMA loan sales and AIB’s c. €9bn remaining non-core real estate exposure. The Irish Times, 19th January
Project Tolka: US investment firm Colony Capital is due to pay in the region of €455m to acquire Nama’s c. €1.5bn par value Project Tolka loan portfolio, in a deal which is expected to be finalised at the end of January. The deal will see Colony Capital take control of loans linked to developers John Flynn, Paddy Kelly and the Dublin based McCormack family. The portfolio, which reportedly received competing bids from Madison International Realty and Lone Star, includes a number of significant assets, including the Burlington Plaza office complex, the Clarion Hotel in Liffey Valley and Paddy Power’s HQ in Belfield. Although the purchase price suggests a 70% discount on the €1.5bn par value, the Irish Independent reports that the actual discount is less than this, as loans linked to a number of assets were removed before the sale took place. These are believed to include loans linked to Carton House Hotel and a number of development sites (linked to NAMA’s aim to develop 20,000 homes by 2020). The Irish Independent, 19th January
Deane Loan Portfolio: NAMA has sold c. €40m of loans associated with Tony Deane to Ardstone Capital for approximately par value, allowing the businessman to exit NAMA. The loans relate to prime residential sites near Stocking Lane in Rathfarnham, Dublin 16, and the company is planning to begin construction of 350 new homes in May. Mr Dean had previously built up a significant land bank in Rathfarnham over many years, however the economic crisis prevented him from securing finance to complete the development. Ardstone Capital is planning to become one of the biggest housebuilders in the country, with plans to develop c. 3,500 homes. Sunday Business Post, 22nd January
OFFICE
Fumbally Square: Fumbally Square, a complex of offices and apartments close to St Patrick’s Cathedral in Dublin city centre, has been sold to European property investor M7 Real Estate for close to the €24m guide price. The complex, which was put on the market by Markland Holdings, contains 84,000 sq. ft. of offices (with an additional 21,500 sq. ft. available for further development) and four already-let two-bedroom apartments. Planning permission for a further 16 homes on the site lapsed several years ago. Current tenants include Golden Pages, Infineon Technologies and the Institutes of Technology Ireland. The rent roll of the complex was c. €1.7m when it was brought to market, although there is scope to increase this to c. €2m by letting empty offices. M7 has advised that the company is increasingly interested in the Irish market, and expects to add further Irish assets to its portfolio in the future. The Irish Times, 19th January
Fenward House: Appian Burlington Property Fund, a new property investment fund, has agreed the purchase of Fenward House, a 20,000 sq. ft. office building located on Arkle Road in Sandyford, Co. Dublin. The building was sold for c. €5m and is let to a software company with a rent roll rising to €430k from 2017. CBRE acted as the selling agent for the property, and the deal will offer the new owner a yield of c. 8%. The property fund is a sub-fund of Appian Investments ICAV, which was set up by Appian Asset Management in November 2016. The fund will focus on high yielding opportunities in the office, retail and industrial sectors in Dublin’s suburbs and other large cities. The Irish Times, 18th January
12 – 13 Exchange Place: A four-storey office block in Dublin’s IFSC has been sold for almost 20% above the €4.4m guide price sought by agents QRE. The property, located at 12-13 Exchange Place, was offered for sale on behalf of receivers PwC with a vacant 11,351 sq. ft. top floor. However, one of the existing tenants, Elix Aviation, opted to rent the top floor, which triggered a renewed round of bidding before the property was sold to a private Irish investment fund for €5.175m. The rent roll of the property is now €290k p.a., offering the new owners a return of 5.5% after allowing for purchasing costs of 4.46%. The Irish Times, 18th January
Dublin Office Demand: The Irish Times reports that demand for office space in Dublin is at its strongest level for many years, even without including potential relocations from UK based financial services firms as a result of Brexit. Companies such as Facebook, AIB, BNP Paribas, Fleetmatics and Huawei are reportedly seeking office space in the city to either support ongoing business growth, or as a result of relocating from other office accommodation which is scheduled for redevelopment. An unnamed US financial services trader, one of the first overseas companies planning to relocate to Dublin following the Brexit vote, has instructed Cushman & Wakefield to find suitable offices of 40,000 – 50,000 sq. ft. in the city. The Irish Times reports that with 1.8m sq. ft. of office space due to become available across c. 30 developments in 2017, there should be sufficient capacity to accommodate the anticipated demand. The Irish Times, 18th January
Two Docklands Central: Hubspot, the US headquartered technology firm, is to rent the third floor of Two Docklands Central in Dublin’s IFSC, which is currently being refurbished by owners Hibernia REIT. The company currently employs 200 people in Dublin and is planning to create a further 320 jobs over the next three years. The new lease has been agreed at a rent of €52.50 psf for 16,000 sq. ft. on a 19-year lease beginning in Q2 2017, with a break in year 11. This latest rental is in addition to the 27,500 sq. ft. lease the company took in 2016 in the adjoining One Docklands Central at a rent of €45 psf. The Irish Times, 18th January
Hibernia Hanover Street: Hibernia REIT has sought planning permission for a new office development on Hanover Street in Dublin 2. The development would include nearly 27,000 sq. ft. of office space over four storeys. The Sunday Business Post, 22nd January
RESIDENTIAL / LAND
Blarney Development Site: The site of the former Blarney Park Hotel in Blarney, Co. Cork has come back on the market, with local estate agent Daniel Fleming guiding c. €400k – €500k per acre for the 8.58-acre site. The site, which enjoys a prime location on the western edge of Blarney, has accessible mains services, water and sewers and can accommodate housing, as well as commercial uses such as hotel / leisure, offices and retail. Cork City Council has recognised it as a ‘sensitive site’ due to its close proximity to Blarney Castle, meaning that any future development will need to protect and enhance both the existing character of the area and views of the castle. The site was last formally offered for sale in 2007 / 8 by Savills / DTZ with a c. €20m guide price, when it was pitched as a Village Centre opportunity, with scope for a 130-bedroom hotel. The Irish Examiner, 19th January
Skerries Development: Planning permission has been granted for a €50m development on a 25-acre site in Skerries, north Co. Dublin that will include 24 houses, a luxury hotel and coastal park and a walkway. The 4,000 sq. ft. houses will be built by Munich-based eco-home specialists Baufritz, using pre-fabricated structures incorporating eco-friendly design and materials. The houses will be built in Munich and shipped to Ireland, significantly reducing traditionally lengthy construction lead-in times. The development is being led by internet entrepreneur Michael Branagan and initial work is due to begin later this year. Mr Branagan is in talks with Irish leisure chain Aura about operating the swimming pool and leisure franchise at the resort, and has also begun discussions with global hotel chains about taking over the franchise for the new hotel. The Irish Independent, 22nd January
Eurostat House Prices: According to figures published by Eurostat, the EU’s official statistics body, Ireland recorded the second highest increase in house prices in the European Union during Q3 2016. House prices in Ireland jumped by 4.7% in Q3 2016 when compared to Q2 2016, second only to Malta, where prices rose by 5.4%. The figures show that Eurozone prices as a whole grew at the fastest rate in more than eight years in Q3 2016. The Irish Times, 22nd January
Wicklow Development Site: CBRE is guiding €2.25m for a 1.2-acre site located on Vevay Road in Bray, Co. Wicklow which has planning permission for 16 family homes. The permission provides for a mix of large semi-detached and terraced houses, all within easy walking distance of Bray town centre. The site also includes a period home which can be restored for use as a private residence. The Irish Times, 18th January
Carrickmines Site: Knight Frank is guiding €4m for a two-acre ready-to-go residential development opportunity on Glenamuck Road South in Carrickmines, Dublin 18. The two-acre site has planning permission for 16 four-bedroom semi-detached houses and 12 apartments, all of which will contain surface level car-parking facilities. The four four-bedroom properties will have floor areas of 1,724 sq. ft., while there will be six two-bedroom apartments, three three-beds and three one-beds. Knight Frank is expecting strong interest in the site, which is within 1.1km of the Ballyogan Luas stop, given the lack of ready-to-go development opportunities in the area. The Irish Times, 18th January
Eir Dublin Sites: Eir has found buyers for two of its sites in Dublin, the first of a number it is planning to sell. One has been sold to a car sales company, which will pay in excess of €4m for a 3.74-acre site in Sandyford Business Park, which includes a 12,000 sq. ft. two-storey office building, outbuildings, stores and a carpark which are producing an annual rental income of c. €214k. The second site is located in Clondalkin and was sold for more than the €5.4m asking price. It extends to 35.45 acres along the M50 corridor and has full planning permission for a 30MW data centre. The site also includes two-storey offices which extend to 22,948 sq. ft. with an adjoining 39,524 sq. ft. warehouse on tarmac grounds of 20.5 acres, and an additional 13.92 acres of undeveloped land. Both sales were handled by agents BNP Paribas Real Estate. The Irish Times, 18th January
Rent Controls: According to research from Lisney, recently introduced controls on residential rents will have consequences for both the investment market and the supply of new rental stock. It claims that while the recently announced ‘rent pressure zones’ (whereby rental increases are limited to 4% p.a. or 12% over three years) are a positive step for tenants, they may deter new landlords from entering the market, and persuade existing landlords to exit, thereby reducing the already low number of rental properties available. The company also flags that construction cost inflation began to cause some problems for forward funding deals in late 2016, and is likely to grow in significance in 2017. According to Lisney, cost inflation is currently much higher than normal, and is currently over 6% annually. With regards to the new Dublin city development plan, Lisney believes that the ambition to keep Dublin as a low-rise city is no longer viable. The Irish Times, 18th January
INDUSTRIAL
Rathcoole Distribution Centre: Irish Life has acquired a purpose-built distribution centre at Aerodrome Business Park in Rathcoole, Co. Dublin for c. €28m. The high quality distribution centre is located in the ‘golden triangle’ of distribution hubs in greater Dublin, with easy access to the M7, M50 and national roads network. The building has a gross external area of 172,295 sq. ft., and includes three-storey offices extending to 10,629 sq. ft. It is fully let to Culina Logistics Ireland Ltd on a long lease from January 2010 at a current rent of €1.8m, offering the new owners an initial return of 6.25%. William Harvey & Co advised the vendor. The Irish Times, 18th January
Claregalway Corporate Park: Cushman & Wakefield is quoting €4m for nine partially occupied warehouse buildings and three serviced sites located at the front of Claregalway Corporate Park in Co. Galway. Only three of the nine units in the park are let, generating current rental income of €62,283. The nine buildings extend to 72,130 sq. ft., while the three sites at the front extend to 1.3 acres and previously had planning permission for detached units with a combined floor area of 40,900 sq. ft. The selling agents plan to sell the warehouse units either individually or a single lot. The park, which was developed in 2007 and is now under receivership of EY accountants, is located around 12km from Galway City on the M6 motorway. The Irish Times, 18th January
Airways Industrial Estate: The sale of two adjoining industrial buildings at Airways Industrial Estate in Santry, Dublin 17 has been completed for €3.21m. Joint selling agents TWM and Cushman & Wakefield completed the sale of the properties to the Yew Tree Commercial Property Fund, who is guaranteed a nine-year income stream from current tenants Essentra Packaging Limited, before a break option kicks in in year 10. Both buildings are rented to Essentra, and extend to a combined area of 87,659 sq. ft. Both leases run for 15 years (with break options in year 10), and a rent of €300k p.a. applies in years one to four, rising to €320k in year five, with open market reviews every five years from 2020 onwards. The current rent equates to c. €3.41 psf, and the initial yield will be c. 8.95%. The Irish Times, 18th January
OTHER
Amazon Data Centre: Amazon has sought planning permission for an additional 151,000 sq. ft. data centre at Clonshaugh in north Dublin, where is it currently completing an 180,000 sq. ft. facility. The company’s master plan for the 37-acre site involves building an additional two similar sized data centres over the next three to five years. Amazon has existing data centres at Blanchardstown and Tallaght in Dublin, but these are at maximum capacity according to the company, therefore additional facilities are required to meet demand for its online services. The new €600m facility would create several hundred construction jobs, and up to 120 full-time high tech positions once operational. According to company figures, Amazon has invested €2.2bn in infrastructure in Ireland, and employs 2,200 people, with a further 500 new jobs planned over the next two years. The Sunday Times, 22nd January
The Globe Pub And Nightclub: Property developer Jerry Conlan has bought The Globe pub and nightclub in Dublin from developer Greg Kavanagh for c. €3m. Mr Conlan owns the nearby Central Hotel and has previously been involved in developments such as the 400-acre Millennium Park business park in Co. Kildare and Mount Carmel Medical private hospital in Kilkenny. The Sunday Business Post, 22nd January.
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