28th November (Issue 124)
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
Lloyds Mortgage Portfolio: Lloyds Banking Group is reportedly considering disposing of its remaining c. €5bn of Irish mainly performing mortgages in a portfolio sale in early 2018. At the end of 2016, 3.5% of the portfolio had been subject to forbearance and 27.8% of the loans were in negative equity. It is believed that a large number of the mortgages were issued under a long-term interest-only structure and may be less attractive to purchasers. Should Lloyds complete the transaction in one portfolio sale, it would be the largest Irish mortgage portfolio transaction to date. The Irish Times, 22nd November
Permanent TSB (PTSB) Capital Raise: The US investment bank Keefe, Bruyette & Woods (KBW), which was part of the syndicate in PTSB’s 2015 IPO, has downgraded the bank’s rating to “underperform” as regulatory pressure may require the bank to raise more capital due to its level of non-performing loans. Although PTSB is preparing to dispose of €1.25bn of distressed buy-to-let mortgages as part of its effort to repair its balance sheet, proposed new EU rules may require banks to reduce their exposures to non-performing loans ahead of schedule which may lead to discounted prices. The Irish Independent, 22nd November
South King Street Portfolio: Joint agents Savills and Bannon are managing the sale of Lone Star’s South King Street portfolio in Dublin city centre, which is expected to attract bids of c. €165m to include the cost of over €40m to redevelop retail units and overhead apartments on Chatham Street. The founder of Zara, Amancio Ortega, is among four shortlisted bidders for the portfolio. Included in the portfolio is 49,158 sq. ft. of retail space, 59,936 sq. ft. of office space and six penthouses, with the assets located on Chatham Street, Grafton Street and Duke Street. The total rental income from the portfolio is €6.8m p.a. and the WAULT of the leases is over eight years. The retail tenants include Zara, H&M and Hickeys Pharmacy, and the main office tenant is the American company Qualtrics. The Irish Times, 22nd November
Charleville Credit Union: The liquidators of the former Charleville Credit Union in Co. Cork have placed its c. €14m par value loan book and c. 10,800 sq. ft. premises on the market for sale. Of the €14m loan book, c. €8m of the loans are believed to be performing. Mallow and Kilmallock Credit Unions are expected to be amongst the interested parties in the loan book, with both credit unions having extended their operations to service the Charleville area after the credit union closed. The Irish Independent, 24th November
RETAIL
Royal Hibernian Way: Friends First has achieved its most significant letting in the redeveloped Royal Hibernian Way off Grafton Street in Dublin 2, with the news that the Press Up Entertainment Group has signed a lease for a 3,900 sq. ft. restaurant. The rent is expected to be in excess of €330k p.a. There is another 2,390 sq. ft. restaurant unit available to rent at Royal Hibernian Way quoting c. €85 psf. The Irish Times, 22nd November
OFFICE
Newenham House: JLL is inviting offers of €16.3m for Newenham House, the first of two five-storey, over-basement office properties located at the Northern Cross Business Park on the Malahide Road in Dublin 17. Newenham House extends to 68,749 sq. ft. and is currently producing rental income of c. €1.36m p.a., offering a return of 9.42%. The tenants in the property include Campbell Catering (guaranteed by Aramark Investments), Experian Group and Cerner Ireland Ltd, and the WAULT of the leases is c. 7.4 years. The Irish Times, 22nd November
Newenham Court: The second office property to be offered for sale at the Northern Cross Business Park is Newenham Court, for which Cushman & Wakefield is guiding in excess of €9.15m. The 48,558 sq. ft. property is fully occupied by Mylan Ireland under two separate ten-year leases from 2012 and 2014, with the tenant having the option to terminate both leases in November 2019. The rental income from the office space is €769k p.a. in addition to €207k p.a. for the use of a 1.952-acre site as a car park. The Irish Times, 22nd November
Richview Office Park: Cushman & Wakefield achieved a sales price of €4.5m, €100k in excess of the guide price, for 8 Richview Office Park, Dublin 14. No information has been released on the vendor or purchaser. The three-storey property has a net internal area of 10,708 sq. ft. and is occupied by Liberty Mortgage Corporation under a 25-year lease from 2007, at a rent of €365,350 p.a. The Irish Times, 22nd November
Molyneux House: Duff & Phelps Ireland is to relocate its Irish HQ to Molyneux House on St Stephen’s Green in Dublin, a property previously occupied by Lisney for nearly 40 years. The six-storey property, which has been substantially refurbished by its owners New Ireland Assurance, has a net internal area of 8,159 sq. ft., and the space includes a recently-completed penthouse floor which extends to 592 sq. ft. Duff & Phelps will pay a rent of €54 psf for the office space and €4k p.a. for each of the four car spaces. The Irish Times, 22nd November
HOTEL
Ballsbridge Hotel: The Ballsbridge Hotel, which is located on the site of the former Jurys Hotel site in Dublin 4, will remain open until at least October 2018, after its lease with Dalata was extended. The previous lease was due to expire in mid-2018, and the revised terms contain an option to extend the lease again until March 2019, subject to the consent of Chartered Land, which is building 217 luxury apartments on the site. Pre-sales for the apartments on the site have already exceeded €100m, with prices psf exceeding €1,000. The Irish Times, 22nd November
Crowne Plaza Extension: The hotel group Tifco is planning to add 60 bedrooms by way of a five-storey extension to the Crowne Plaza hotel near Dublin Airport, which would increase the number of bedrooms to 269 in total. Tifco owns and operates nearly 30 hotels in Ireland, and is Ireland’s second-largest hotel group after Dalata. The company, which is part owned by Aidan Crowe and Gerry Houlihan, is backed by Goldman Sachs. The Irish Independent, 24th November
Radisson Blu Galway: The new owners of the Radisson Blu Hotel & Spa in Galway have chosen not to renew the hotel’s management agreement with Rezidor, and will rename the hotel the Galmont to reflect the change in ownership and management. The 261-bedroom hotel was acquired last month by MHL Hotel Collection for c. €50m. MHL is backed by John Malone and now owns 11 hotels, including The Morgan, The Spencer, The Beacon and Hilton Charlemont hotels in Dublin. The Sunday Times, 26th November
Clarion Hotel Liffey Valley: Lisney has been retained as the selling agent for 13 suites at the Clarion Hotel Liffey Valley in Dublin by the CarVal-appointed receiver, Tom Kavanagh of Deloitte. Dalata is expected to be among the interested parties for the suites, as the company already owns 138 bedrooms, 33 suites, the common areas and the hotel’s restaurant. The Sunday Times, 26th November
Dublin City Aparthotel: LMS Investments DAC has sought planning permission from Dublin City Council to develop a three-to-seven storey, 160,000 sq. ft. development to contain 343 aparthotel units, 2,000 sq. ft. of retail space and 1,000 sq. ft. of artist space in Dublin city centre. The proposed development would be completed on a site between Anglesea Row and Little Mary Street, which is located near Capel Street. The directors of LMS are David Cullen and Tom Maughan. NAMA Wine Lake, 26th November
RESIDENTIAL / LAND
Boston Sidings: Sean Mulryan’s Ballymore Properties is understood to have been chosen by CIÉ as its development partner for the 0.87-acre Boston Sidings site next to Grand Canal Dart station in Dublin 2. The project will see c. 120,000 sq. ft. of office space developed at the site, with Ballymore responsible for the completion of the scheme. CIÉ will receive a portion of the rent from the completed project, with its income understood to be the greater of 10% of the rent or €1m p.a. It is reported that Clarendon Properties and Ronan Group Real Estate had also tendered for the project. The Irish Independent, 26th November
St Mary’s Home: Joint agents Lisney and Ganly Walters are inviting offers in excess of €5m for a three-storey, 13,000 sq. ft. Victorian nursing home in Ballsbridge, Dublin 4. St Mary’s Home, which is situated on a 0.86-acre site, is not a listed building so it could be converted for residential use to apartments or demolished and redeveloped into a high-rise block. A mews house on Clyde Lane is also included in the sale. A feasibility study by John Fleming Architects suggests that the current property could be converted into 11 apartments and nine new houses could be developed on the site. The Irish Times, 22nd November
Mortgage Legislation: The deputy governor of the Central Bank, Ed Sibley, has expressed concerns about legislation proposed by Fianna Fáil’s Michael McGrath under the Mortgage Arrears Resolution (Family Home) Bill. The bill proposes to establish a mortgage resolution office to review disputes between financial institutions and borrowers of family home mortgages, in an attempt to avoid repossessions and to encourage lenders to agree deals with borrowers in distress. In a 10-page letter in response to the proposed legislation, some of the concerns expressed by Mr Sibley include (i) it would impact the ability of secured lenders to repossess properties, (ii) it might result in increased interest rates and (iii) there is no provision in the bill for non-mortgage debt. The Irish Independent, 25th November
Mortgage Approvals: New figures from the Banking and Payments Federation of Ireland show 3,751 mortgages valued at €834m were approved in October 2017, an increase of 20 per cent in volume terms, and by 35 per cent in value YoY. According to Philip O’Sullivan, economist with Investec, rising house prices accounted for c. 37% of the increase in the overall approval value. The figures show that the average value of an approved loan was €215k in October 2015, up by 10 per cent YoY. First-time buyers are driving growth, with approvals up by 30.7 per cent YoY to 1,911, accounting for about 51 per cent of October 2017 approvals. Dermot O’Leary, economist with Goodbody Stockbrokers, expects mortgage lending to be €7.3bn for 2017, up 28 per cent YoY, and €8.6bn in 2018, “with net lending to also turn positive over the period”. Mr O’Sullivan forecasts total drawdowns of €7.4bn in 2017, and €9.1 billion next year. The figures show that the fastest growing segment on an annualised basis was switching, although the overall numbers remain low, with 321 people switching in October 2017. The number of buy to let mortgages increased by 22 per cent on the year, however this figure also remains very low, with 181 such mortgages approved in October. Mover purchase approval volumes are up by 11.3 per cent on the year to end of October 2017 to 1,132, accounting for 30 per cent of all mortgages. The Irish Times, 28th November 2017
OTHER
Bank of Ireland Branches: Murphy Mulhall is selling two Bank of Ireland branches in Walkinstown and Coolock, which are both let on 25-year leases from October and September 2012 respectively, and have the benefit of fixed rental uplifts of 15 per cent every five years, with no break options. The selling agent is quoting €4.3 million for the BoI branch at Drimnagh Road, Walkinstown, which was refurbished and enlarged in 2012, extending to 11,838sq ft in total. The branch produces a rental income of €256,490. Murphy Mulhall is quoting €2.66 million for the BoI building at Malahide Road in Coolock, which also underwent considerable refurbishment in 2012 and has a floor area of c. 5,508 sq ft. The rent is €158,700 p.a. The investments are to be sold in one or two lots at a net initial yield of 5.5 per cent after purchaser costs of 8.46 per cent. The Irish Times, 22nd November
Viridian Biomass Plant: The energy company Viridian is considering the development of a c. €150m biomass power plant in Dundalk, Co. Louth. The company is in discussions with An Bord Pleanála about the facility, which if completed would provide enough energy for thousands of homes. Viridian already has a substantial portfolio of energy assets in Ireland, with 747MW of gas-fired capacity in Dublin, and 225MW of onshore wind-energy assets. The company also operates c. 1,000MW of windfarms under long-term contracts. Viridian is owned by the US investment firm I-Squared Capital, who acquired the company from Arcapita in 2016 for c. €1bn. The Irish Independent, 25th November
Sherry Fitzgerald Auction: An auction by Sherry Fitzgerald last week saw the sale of 32 lots for the cumulative amount of €9.6m. The properties included a retail unit at 49 William Street in Galway, let to Vision Express Ireland, and a Bank of Ireland branch at 97 Main Street in Midleton. The Sunday Business Post, 26th November
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