26th July (Issue 56)
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 Gem: Bloomberg has reported that NAMA will launch the sale of a c. €4bn par value loan portfolio by the end of 2016. While details on the portfolio, named Project Gem, are not yet available, it is believed that the loans will be some of the lower quality assets held by NAMA. NAMA Wine Lake estimates that the par value of NAMA’s remaining loans on its balance sheet is c. €34bn, for which the market value is c. €6bn. NAMA Wine Lake, 24th July
Project Tolka: The commencement of the sales process of NAMA’s Project Tolka c. €1.5bn par value loan portfolio looks set to be delayed as NAMA try to perfect the title documents on a number of assets in the portfolio. The assets in the portfolio include the Burlington Plaza office complex (reportedly valued at c. €250m), the Clarion Hotel in Liffey Valley and the Belfield HQ of Paddy Power. The borrowers in Project Tolka include Paddy Kelly, John Flynn and the McCormack family. NAMA Wine Lake, 24th July
RETAIL
Liffey Valley: The owners of Liffey Valley Shopping Centre appear to be moving closer towards putting the shopping centre and an adjoining site up for sale, with The Irish Times reporting that they have retained Eastdil to broker the sale. The shopping centre is owned by Hines, HSBC Alternative Investments and the Grosvenor Group. The latest projected sales price reported is c. €600m. The Irish Times, 21st July
Debenhams Leases: Debenhams Retail Ireland has moved a step closer towards exiting examinership after agreeing a rent deal with Marathon Asset Management for four stores where Marathon is the landlord. The stores are in Limerick, Galway, Kerry and Waterford. Debenhams had sought to repudiate the leases in these stores and an additional lease for their unit in The Square in Tallaght, Co. Dublin. The Tallaght unit is managed by Laseda, who manages the entire shopping centre. There has been no update provided on negotiations between Debenhams and Laseda. The Sunday Times, 24th July
Nenagh Retail Park: An unnamed family has acquired Nenagh Retail Park in Co. Tipperary for slightly above the €2.6m asking price. The park consists of seven warehouses which have a combined floor area of 158,000 sq. ft. and 400 car spaces. Two adjoining development sites of c. 3.1 acres are also included, offering the acquirer future development potential. The anchor tenant is Woodies DIY, who pay c. 43% of the current rent roll of c. €240k p.a. The rental income is expected to increase to c. €290k p.a. in the near future following the agreement to let a vacant unit. The Irish Times, 20th July
Carrig Donn Ennis: Sherry FitzGerald McMahon is inviting offers of €2.25m for a 10,710 sq. ft. retail unit (c. €210 psf) occupied by the Carrig Donn Group in Ennis, Co. Clare. Carrig Donn is paying rent of c. €115k p.a. (c. €10.73 psf) under the existing lease, which runs until 2026. The property was previously used as a Bank of Ireland branch. The Irish Times, 20th July
Camden Street Restaurant: FC Hospitality, which is owned by Dublin footballers Diarmuid Connolly and Eamonn Fennell, has sought planning permission for a new restaurant on Dublin’s Camden Street. The property is located beside Cassidy’s Bar and DeSelby’s, a recently-opened restaurant. The Sunday Times, 24th July
OFFICE
Central Bank HQ: The Central Bank is reportedly considering the sale of their existing HQ on Dame Street, along with two other commercial properties on College Green in the coming months. Together the three properties may sell for over €60m. Construction of the Dame Street HQ was completed in 1978, with the official opening occurring in December 1979. On its own, the HQ may command a price tag in excess of €40m on the open market. The other two commercial properties the Central Bank may sell are No’s 6-8 and 9 College Green. The Central Bank is expected to begin moving into their new HQ on North Wall Quay at the end of this year, which has cost c. €140m to develop. The Irish Independent, 21st July
Lower Baggot Street: Larry Goodman’s investment vehicle is understood to be in “advanced discussions” with the pharmaceutical giant Shire over the leasing of c. 76,000 sq. ft. of office space in the former Bank of Ireland HQ on Lower Baggot Street, Dublin 2. With the Department of Health having already agreed to occupy the main office block on the site (c. 143,000 sq. ft.), Shire would occupy the two smaller blocks (c. 45,000 sq. ft. and c. 31,000 sq. ft.). If both the Department of Health and Shire pay the quoted rent of €60 psf sought by the letting agent Knight Frank, then the total rent roll of the complex will be c. €13m p.a. Larry Goodman acquired the site for over €40m in 2013 and has since spent c. €100m redeveloping the complex. The Irish Times, 20th July
Arkle Road: Noel Smyth, through his investment vehicle Wexele, has obtained planning permission to develop three office blocks on a site at 3 Arkle Road in Sandyford, Co. Dublin. The adjoining blocks will range from six to seven storeys in height and have a cumulative floor area of c. 230,000 sq. ft. The development will also include a ground floor café and 186 car spaces. Wexele is now understood to be seeking to either pre-let the office space or else source a funding partner for the development. The cost of the development is projected at €55m – €60m, while the end value is estimated at c. €150m. Wexele is expected to seek rents of €28 – €30 psf for the office space. The Irish Times, 20th July
Docklands Extension: IPUT has sought planning permission from Dublin City Council to extend 25 – 28 North Wall Quay by c. 19,000 sq. ft. The extension would be six storeys tall and located to the rear of the property. A&L Goodbody currently occupy the property. NAMA Wine Lake, 24th July
RESIDENTIAL / LAND
Capital Dock: Kennedy Wilson (KW) has tasked John Sisk & Son with developing the proposed 660,000 sq. ft. mixed use development on their Capital Dock site in the south Dublin docklands. KW paid c. €106m in 2012 to acquire their interest in the 4.8-acre site. The development of the site is now being undertaken by way of a joint venture with NAMA, who have a 15% interest in the project. The Capital Dock development is expected to include 330,000 sq. ft. of office space across three blocks and 190-high quality apartments in a 23-storey tower. There will also be retail and leisure facilities on-site. The first office block is expected to be completed by the end of 2017, while the target completion date for the apartments is mid-2018. The Irish Times, 22nd July
New Generation Portfolio: Bartra Capital, the company owned by Richard Barrett, is believed to have withdrawn from the race to acquire a development land portfolio being sold by New Generation. Bartra was understood to have been the highest bidder on the 27-site portfolio, for which a price tag of c. €320m was being sought. The sites are believed to be capable of facilitating c. 3,000 homes across 143-acres. The locations of the sites include Dundrum, Blackrock and Harold’s Cross in Dublin. The Sunday Business Post, 24th July
Social Housing Funds: Following the announcement that the Government are to undertake a major social housing development project, two private funds look set to enter the market to part finance the development of social housing units. The first potential funder is Bartra Capital, which is expected to contribute a minimum of €100m. The second potential funder will be led by Donal McManus, the chief executive of the Irish Council for Social Housing. McManus is reportedly trying to raise up to €100m from private investors. The Sunday Business Post, 24th July
Affordable Housing Fund: Bill Nowlan, the former Head of Property Investment for Irish Life, is seeking to establish an investment fund which will target the affordable rental scheme, which was unveiled in the Government’s recent housing action plan. The fund will aim to supply the sector with c. 500 to 1,000 units a year, using land provided by the state. Once the units are completed, the fund will then lease them to an approved housing body where the rent would be dependent upon the development cost. Using this structure, rents for the units may be only c. 70% of market levels. The Sunday Times, 24th July
Ziggurat Sites: The student accommodation developer Ziggurat is reportedly in negotiations to acquire six development sites for student accommodation. It is understood that three of the sites are in Cork and three are in Galway. Ziggurat hope to have a portfolio of 4,000 student beds in Ireland by 2021. Earlier this month Ziggurat announced that they had acquired two development sites in Dublin, which are expected to accommodate c. 800 beds and should be in operation by 2019.The Sunday Business Post, 24th July
Clontarf Development: An unnamed group of investors has acquired a 0.96-acre site in Clontarf, Dublin 3 for €4.25m. The site comes with full planning permission for 17 three-bed family homes, which will range in size from 1,055 sq. ft. to 1,927 sq. ft. Planning permission was granted in June 2014 by An Bord Pleanála. The Irish Times, 20th July
Mars Capital (MC) Repossessions: MC has suffered a setback in their legal proceedings against 583 borrowers which were part of a c. 1,500 mortgage portfolio acquired from IBRC in 2014. The 583 borrowers were already the subject of legal proceedings before MC acquired the portfolio at a c. 58% discount. MC then sought to continue the existing legal proceedings outstanding against each borrower, however the High Court has ruled that they must now restart each repossession order from the beginning. The Sunday Times, 24th July
Dolphin House: The government has given the go-ahead for the first phase of the redevelopment of Dolphin House in Dolphin’s Barn, Dublin City. A funding package of €25m has been allocated by the government, which will be used to develop 100 homes. 72 apartments in three existing blocks will be refurbished to provide 63 bigger apartments, with three more blocks being built to provide an additional 28 apartments. Nine new houses will also be built. Of the 100 new homes, 40% will be one-beds, 41% will be two beds and the balance of 19% will have three or more bedrooms. The proposal will also see the creation of internal courtyards, which should reduce anti-social behaviour in the area. The Irish Times, 21st July
Mortgage Arrears: The Department of Finance’s report on mortgage arrears for May 2016 shows that there are now c. 65k Principal Dwelling House (PDH) accounts in arrears, a c. 19% decrease on the May 2015 figure. Following the reduction of accounts in arrears, 616k PDH accounts (c. 90% of the total) now have no arrears. The number of Buy-to-Let (BTL) accounts in arrears in May 2016 was c. 22k, a c. 21% decrease from May 2015. The total number of BTL accounts outstanding in May 2016 was c. 117k, meaning that c. 95k (82% of the total) had no arrears. Department of Finance Mortgage Restructures Data, May 2016
House Purchases: A new report by the Central Bank shows that nearly 60% of all house purchasers in 2013 and 2014 were cash buyers. When examining the causes behind the increase in the level of cash buyers, the report highlights the decline in mortgage drawdowns and the low levels of construction as some of the influencing factors. Cash buyers include older individuals looking to downsize, private investors and individuals who have received pension lump sums. The Irish Times, 25th July
Pepper Mortgage Rates: Pepper has announced interest rate reductions of up to 0.45% on a number of their variable mortgage rate products. First time buyers who secure a mortgage with Pepper will now be able to borrow at a rate of 3.1%, provided their loan-to-value is no more than 50%. Pepper will also reduce their buy-to-let rates by up to 0.20%. Pepper’s Advantage Product rates will also be cut by as much as 0.35%. The Advantage Product targets borrowers who have previously been in arrears, with these rates now ranging from 3.85% to 5.05%. Pepper, who manage c. 50,000 loans in Ireland on behalf of other lenders, launched their own mortgage products in January 2016. The Irish Independent, 26thJuly
INDUSTRIAL
Westlink Industrial Estate: Irish Life has sold the Westlink Industrial Estate in Ballyfermot, Dublin 10, to a joint venture of Ardale Property and C2 Capital for over €7.5m. The 30-year-old industrial estate has a total floor area of 180,000 sq. ft. spread across 31 units. According to The Irish Times, the new owners may look to upgrade the industrial estate now that the sale has been concluded. The Irish Times, 20th July
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