30th January (Issue 131)
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
Stepstone Mortgages Loan Sale: US private equity giant Cerberus has purchased sub-prime lender Stepstone Mortgages in a near €100m deal. Dublin-based Stepstone, once a joint venture between Lehman Brothers and IIB – an early manifestation of KBC Bank – stopped issuing new loans in 2008 and has since been managing its heavily impaired loan book. The sale of Stepstone closes the chapter on Ireland’s sub-prime lending boom with Start Mortgages and Nua Mortgages having previously been acquired by Lone Star. The Irish Independent, 25th January
OFFICE
Northwood Business Campus: Knight Frank is seeking a purchaser for a strategic development opportunity in the mixed-use Northwood Business Campus in Santry. The agency is seeking in excess of €2.8m for the 3.43 acre site located within 1km of Junction 4 of the M50 motorway and close to the M1 interchange. A range of planning permissions were granted for the site over the years but have all since lapsed. Knight Frank suggests it could now be considered for office, residential, student accommodation or retail uses. Most of the site is currently covered in grass however a section along the eastern boundary is in use as a car park. The Irish Times, 24th January
New Ireland’s Headquarters: The Irish Times reports that Bank of Ireland (BOI) plans to put its subsidiary New Ireland’s central Dublin headquarters on Dawson Street up for sale in the coming weeks with a price tag of c. €30m. It is understood Savills will be the selling agent and that the 60,000 sq. ft. building will be sold with vacant possession, as the insurer intends to move out at some time this year. The sale should draw significant interest from major property players as Dawson Street has been a centre of focus for some time. British bank, Barclays, last year agreed to rent a new office building built by Green REIT at the junction of Dawson and Molesworth streets and directly across the road, IPUT pre-let a building to Jet.com (a Walmart subsidiary) for €1.8m p.a. or €60 psf. The Irish Times, 25th January
Beckett Building East Wall: Galway developers Luke and Brian Comer are set to secure €95m from the sale of the Beckett Building office block on East Wall Road in Dublin to Munich-based GLL Real Estate Partners. Located in the city’s north docklands where Google, Cisco Systems and Altaba (formerly Yahoo) occupy space, the building has been occupied by Facebook since last year, following their decision to expand beyond its headquarters in Grand Canal Square. Facebook are leasing over 100,000 sq. ft. of office space in the building at €24 psf, a fraction of the prevailing rate in Dublin’s Silicon Docks and Central Business District. The Comer’s stand to make a significant profit on the sale of the property having acquired it in 2011. Prior to the Comer’s acquisition, the six-storey building lay vacant for almost a decade. The Irish Independent, 24th January
Cairn House Office Block: The Friends First Irish Property Fund has added the Cairn House office block in Dublin’s South County Business Park to its fast-growing portfolio of properties. The fund which was recently acquired by Aviva, manages over €500m of property assets and has spent an additional €7m acquiring Cairn House, which extends to 25,327 sq. ft. The building, which is partly let to Fonua, a consumer electronics solutions provider, has 7,600 sq. ft. of vacant space available to let through HWBC at €28 psf. The fund also owns the adjoining Ardagh House, which it acquired in 2015 and is fully let to the Ardagh Group. HWBC advised Friends First on the purchase of Cairn House and CBRE acted for the vendor. The Irish Times, 25th January
HOTEL
Abbey Street Upper: Marlet Property Group has paid more than €22m for a 0.87 acre development site on Abbey Street Upper, Dublin 1. The site which guided at €14m, and has been vacant for decades, was assembled by CIE between 1978 and 1993. In advance of marketing the site for sale last year, the vendors commissioned a development feasibility study, assessing a number of potential uses such as office, hotel and student accommodation. The site would lend itself to a hotel development given its location in the heart of the city centre and close proximity to Connolly and Heuston train stations, Busaras and the Luas lines. The site previously had planning approved for a 10-storey over basement hotel, incorporating a bus interchange at ground level, however these plans never came to fruition and the site has remained idle. The Irish Times, 28th January
The Independent also ran a piece on Marlet Property’s acquisition of the Abbey Street Upper site and states that they are planning a 220-bed hotel, 300-bed aparthotel and number of retail units for the site. The hotel and aparthotel are likely to entail c. €90m of construction costs, however no planning application has yet been submitted. The Irish Independent, 28th January
Clery’s Redevelopment: The owners of Clery’s department store premises on O’ Connell Street have engaged the services of Knight Frank to secure office tenants, Savills to source retailers and CBRE to select an operator for the planned boutique hotel. While the search for occupiers is still at an early stage, it is understood that the redevelopment has attracted interest from an array of Irish and international businesses. Developer Paddy McKillen Jr, leading UK restaurant operator Rhubarb and the Belfast-born owners of New York’s famous Dead Rabbit Bar are among the parties understood to have expressed interest at this stage. Natrium, a joint venture comprising Deirdre Foley’s D2 Private and Cheyne Capital Management acquired the former department store from Gordon Brothers for €29m in 2015 and Dublin City Council granted planning permission in December 2016 for a mixed-use scheme comprising offices, retail units, leisure facilities and a boutique hotel on the site. The Irish Independent, 25th January
Gleneagle Hotel Killarney: The Company behind the Gleneagle Hotel and INEC venue in Killarney is accelerating its capital investment plans after completing a €30m refinance of its debt. The Group intend to carry out guestroom refurbishments, facility upgrades and technological advancements at the hotel on a phased basis so as not to interfere with the day to day operation of the hotels. The Irish Times, 24th January
RESIDENTIAL / LAND
Dublin Docklands Report: Property agent Owen Reilly’s Docklands Residential Report 2018 found 2017 to be a very strong year for the Dublin Docklands residential market. Capital values in the Docklands increased by 13.1% and rental values were up by 10.8%. Rents on their managed portfolio are up only 6% which shows that cap rents are working from a tenant’s perspective and further evidenced by the high renewal rate of 83%. Strikingly, only 8% of their tenants were Irish, which reflects where local companies are recruiting from. The sales market was underpinned by tight supply which produced strong selling prices and fast selling times, particularly in the first six months of 2017 when values increased by 9.2%. Year on year values are up by 14% in Grand Canal Dock and although investors were still dominant at 66%, there was a significant increase in activity from owner occupiers, a trend they expect to continue in 2018. The report also analysed Docklands planning applications and found a significant mismatch between the capacity of new office space and residential accommodation. There is 314,000 sq. m. of office space planned to accommodate c. 26,000 employees, and only c. 2,600 new residential units planned to accommodate c. 6,500 residents. The report concluded that unless residential development is increased significantly, then there will be excessive pressure on both rental and capital values for the foreseeable future. The Docklands Residential Report, Owen Reilly Property Agents
Glenveagh Property Acquisitions: Housebuilder Glenveagh Properties has exchanged contracts on two development sites that will potentially deliver 395 residential units in Citywest, Dublin 24, and Hollystown, Dublin 15. The Citywest site is located in close proximity to the Fortunestown Luas stop and Citywest Shopping Centre. Glenveagh aim to deliver c. 200 family homes on 19 acres of residentially zoned land on the 162-acre Hollystown Golf Club site. The latest acquisitions means that the company have now spent €178m of the €550m raised when the company listed on the Stock Exchange in October 2017 and is sitting on a land bank with capacity for over 5,000 units. The Irish Independent, 29th January
INDUSTRIAL
Dublin Airport Logistics Park: Rohan Holdings has embarked on developing a speculative 50,000 sq. ft. detached industrial building at Dublin Airport Logistics Park. Rohan has engaged Glenbrier to handle the development of Heron House, which will be completed by the third quarter of this year. A headline rent of €9.45 psf and a sales figure of €149 psf will be competitive given the block will have a 12m eave facility and 35m private yard. Rohan also embarked on two other speculative 40,000 and 30,000 sq. ft. units in the same park last year, both of which will be completed in the next month. Rohan is also understood to be gearing up to develop two 20,000 sq. ft. units at North City Business Park in the coming weeks as well as the possibility for three further units at Dublin Airport Logistics Park totalling 130,000 sq. ft. The developer’s decision to proceed with new buildings has been triggered by a range of deals concluded in 2017, including the letting of 65,500 sq. ft. to Holland & Barrett at €9.44 psf and a 40,000 sq. ft. letting to Fonua. The Irish Times, 24th January
Brewery Business Park Dundalk: Cushman & Wakefield and Sherry Fitzgerald Carroll have brought Brewery Business Park in Dundalk to the market guiding €4.2m. Located c. 2km from Dundalk town centre, the property occupies the former site of one of the longest established breweries in Dundalk. The brewery and packing site closed in 2000 and the site has since been redeveloped into a large business park within easy access to the motorway and wider national road network. The business park extends to 20 acres, consisting of 57 industrial units, comprising around 353,500 sq. ft. The current rent receivable is €663k p.a. with the anchor tenant accounting for €300k p.a. There is a further 145,000 sq. ft. of vacant space within the park, offering further potential to enhance rental income. The Irish Independent, 29th January
Northwest Business Park: Knight Frank recently completed the sale of the largest vacant industrial building in 2017, at Northwest Business Park, Ballycoolin, Dublin 15, for in excess of €12.2m (€90 psf). The property which guided €9.75m when it came to market in May last year, comprises a modern detached unit which extends to 135,000 sq. ft. on a 6.45 acre site and features internal eaves height of 12m, a manned security entrance and a yard depth of 60m. The property was purchased by IPUT, the largest unlisted property vehicle in Ireland, with more than €2.3bn worth of assets under management. The Sunday Business Post, 28th January
RETAIL
Mercantile Group: The Mercantile Group’s Opium venue reopened last week after a €4m refurbishment and with a new nightclub. Opium is one of the venues owned by Michael Breslin and Maurice Regan through their c. €50m valued Mercantile Group. Opium’s refurbishment is part of a €30 million investment programme by the group across its portfolio, which includes the Mercantile bar and hotel on Dame Street, Whelan’s of Wexford Street, the George, NoLita, Café en Seine and Pichet restaurant. Next year Breslin and Regan plan to triple the size of the Mercantile hotel to about 100 bedrooms. The Sunday Business Post, 28th January
OTHER
Little Island Cork: US-based T5 Data Centers, which owns and operates wholesale data centres for data centre users in North America, is to team up with Cork private development company, JCD Group, in a joint venture to develop the T5@Ireland data centre campus, with an initial development value of €70m. This is T5 Data’s first venture outside of the US and they are hoping their Irish base can take advantage of the pending changes that Brexit will bring in, and drive data traffic from the UK. The new T5@Ireland campus is on a 32.5-acre site located in Little Island, Cork with access to a 60MW electrical grid in the adjoining substation. The campus has full planning permission in place for two 7MW enterprise co-location facilities and a cloud-targeted 30,000 sq. m. 32MW data centre facility. The buildings have been designed by US architectural firm Corgan and British engineering firm Cundall, which both specialise in data centre design. The Sunday Business Post, 28th January
Davy Report: Stockbrokers Davy have reported that there are now clear signs that the recovery in the property market is broadening out to benefit the industrial and retail sectors, with prime industrial values now recovered to c. €150 psf, well in excess of build costs which is c. €120 psf. Take-up in the industrial sector in both 2016 and 2017 was only c. 2.6m sq. ft. which is almost 40% lower than in 2015, reflecting a significant shortage of supply. Green REIT currently has four live developments at Horizon Logistics Park totalling more than 200,000 sq. ft. and Rohan Holdings is also significantly increasing developments at the Dublin Airport Logistics Park and other parks around the M50 in Dublin. The recovery is also feeding through to the retail sector with rising footfall, consumer sentiment and sales activity. The Irish Times, 24th January
Riverdance Landmark Theatre: Riverdance is advancing plans for a landmark 43,000 sq. ft. facility, including a 250-seat theatre, in Dublin’s north inner city. The facility would include a theatre, rehearsal space and classrooms, and an exhibition space according to a briefing document recently sent to Dublin City Council. Riverdance has had its offices on Capel Street in the north inner city for 22 years, where it also conducts rehearsals and costume design. The Sunday Business Post, 28th January
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