31st January (Issue 81)

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.



Project Cyprus: Bids on Project Cyprus, AIB’s book of buy-to-let properties, were lodged last week as the lender prepares for a major disposal of a non-performing c. €1.8bn loan book in advance of its planned privatisation. The Sunday Business Post reports that Cerberus is amongst the most likely buyers for the portfolio. In addition, the lender is considering further disposal options for non-performing loans, including selling personal loans (which include credit card debt and other secured borrowings) and shifting non-performing family home loans into a Special Purpose Vehicle (SPV). The Sunday Business Post, 29th January



Gateway Shopping Park: The new owners of Gateway Shopping Park in Knocknacarra in Galway are to spend c. €20m on the second phase of the park, which will provide a further 120,000 sq. ft. of retail space to accommodate between eight and 12 new traders, bringing the overall retail space in the park to 320,000 sq. ft. The extension, which will also include the construction of 36,000 sq. ft. of Grade A office space, will be completed in 2018. The park, which is managed by Sigma Retail partners, currently produces a rental income of €1.4m from a variety of tenants including Dunnes Stores, B&Q, New Look and McSharrys Pharmacy. The centre benefits from valuable planning approval for open use retailing, and also includes a 3.94 acre adjoining site which is now to be developed, and a further 5.45 acres which is also commercially zoned. The Irish Times, 27th January

Tesco Roscrea: Estate agent TWM has brought the Tesco supermarket in Roscrea to market with a guide price of €12.5m. The supermarket, which is available on a long-term secure income stream, will offer an initial return of 7.25%. This will increase further after July 2021 as the rent is linked to the Consumer Price Index, with the first uplift due on that date. The supermarket is let to Tesco Ireland for €950k p.a. on a 35-year FRI lease from July 2011, with a tenant break option in July 2026. The supermarket is located in the centre of Roscrea and comprises a 46,460 sq. ft. building with the supermarket at ground floor and 224 car parking spaces on a lower floor. The Irish Times, 25th January

St Andrew’s House: CBRE is quoting €8.3m for St Andrew’s House in Dublin 2, a four-storey over basement Victorian block with five shops fronting on to Exchequer street, and a further two retail outlets on South William Street. In addition to the retail units, the property contains three floors of offices extending to 6,943 sq. ft. and three two bedroom apartments. The current combined rent roll on the property is €532k p.a., however this is expected to reach €680k p.a. when the building is fully let, offering the new owners a net return of 7.5%. CBRE expect considerable interest in the property due to its prime location and the demand for properties in the area. The Irish Times, 25th January

Carlow Central Shopping Centre: Penneys has been announced as the anchor tenant of the new c. €70m Carlow Central Shopping Centre which is due to open towards the end of next year, employing 800 full and part-time staff. The new shopping centre will contain 200,000 sq. ft. of retail space, 640 car parking spaces and 10,000 sq. ft. of office space, in what will be the first purpose-built retail development in Ireland in several years. Penneys already has a store in Carlow, which will be incorporated into the new 51,000 sq. ft. unit, and developer Lexeme Properties has stated that negotiations are currently at an advanced stage with a number of national and international retailers to take units in the new centre. The Irish Independent, 27th January



Cherrywood Business Park: US real estate company Hines has reportedly appointed Eastdil Secured to manage the sale of five office blocks at Cherrywood Business Park for c. €160m, in what will be the first major asset sale of 2017. Hines purchased the 400-acre Cherrywood Business Park for €270m just over two years ago in conjunction with another American fund, King Street Capital. The Irish Independent, 29th January.

Riverview House: A landmark office building in Carrick-on-Shannon, Co. Leitrim, which is occupied by the Department of Social Protection, has been sold for over €6.2m, a premium of more than 11% on the €5.47m guided by selling agents TWM. Riverview House is a 40,000 sq. ft., three storey, over-basement office building which is let to the Department on an FRI lease which runs until 2026 with no break options. The annual rent is €600k, offering the purchasers an initial yield of over 9% (assuming standard purchasing costs). It is understood that the buyer of the property is a private investor. The Irish Independent, 29th January.

Former EBS HQ: A private investor has paid almost €8m for the former EBS HQ office building located on Townsend Street in Dublin 2. The purchase price was slightly above the €7.5m guide price, and the new owner has not yet advised as to his intentions for the property. A feasibility study for the previous owner of the block (and the adjoining 0.3-acre site with 16 car parking spaces and an external store) identified a number of potential uses. These include replacing the four-storey block with a nine-storey building containing 119 hotel suites, a scheme of 168 student accommodation beds or a seven-storey, 46,000 sq. ft. office building. Anthony Nicholas Ltd has occupied the building from last summer on a five-year lease with a mutual break option at the end of year two, and a rolling mutual break option thereafter. The Irish Times, 25th January

Dawson Street Offices: An application has been lodged with Dublin City Council to demolish existing buildings on the corner of Dawson Street and Nassau Street in Dublin city centre and replace them with a 6-7 storey 250,000 sq. ft. building consisting of 85,000 sq. ft. of retail space over three levels, with the remainder mainly composed of office space. NAMA Wine Lake, 29th January



RTE Donnybrook Site: RTE has announced that it is to sell a significant portion of its Donnybrook site within the next six months. Although the company has not specified how much land it is selling, it is believed it could be up to 15 acres, almost half of the 31-acre site it currently occupies. Property sources have suggested that the land being sold could be worth at least €70m as a site for a large apartment scheme. The land in question was rezoned Z12 in 2013, which makes housing a ‘permissible use’, meaning that permission should be granted for planning applications for housing that are within the relevant guidelines. The change in zoning followed on from a High Court ruling in 2012 that a ban on private residential development on all institutional lands in the city’s current development plan was overly restrictive. The Irish Times, 26th January

Rialto Cinema Site: The site of the former Rialto Cinema in Dublin has gone on sale through agents BNP Paribas Real Estate with a guide price of €2.5m. The 0.76-acre site fronts onto the South Circular Road and is within walking distance of the Coombe Hospital, St Patrick’s Cathedral and Rialto Luas stop. The selling agent has advised the site would be suitable for a variety of uses including retail, residential, office, hotel and medical centre. The Irish Times, 25th January

Rent Pressure Zones: Rent caps have been extended to a further 24 areas with immediate effect, in an extension of the new rent-pressure zones scheme.  The caps, which limit rent increases to 4% p.a., were introduced in Dublin and Cork before Christmas. The new list includes Galway city, as well as 23 towns in Cork and along the Dublin commuter belt, including Bray, Naas, Newbridge, Laytown-Bettystown, Ashbourne and Rathoath. The final list was identified based on recommendations by the Residential Tenancies Board and the Housing Agency. In order for a town to be designated as a pressure zone, the average rent had to have been above the national average, and prices must have increased by 7% in four out of the last six quarters. The Irish Independent, 27th January 

Mortgage Approvals: Data released by the Banking and Payments Federation of Ireland (BPFI) shows that the volume of mortgage approvals rose by 29% in December 2016, and rose by 61% compared to November 2015. The statistics show that the average loan size increased by 6% in December 2016, and the annual growth rate in the value of mortgages was 36%. Lending was up 42% in the final quarter of 2016, with the average mortgage valued at €204k. There was a 45% increase in the number of first time buyers entering the market when compared with 2015, along with a 43% spike in the number of mover purchases. Buy to let mortgage approvals increased by 24%, but still account for only 3% of the total number of mortgages. In total, there were approximately 30,000 mortgage approvals over the course of 2016. The Irish Independent, 27th January

Westport House: Westport House in Co. Mayo has been purchased by the Hughes hotel group, in a deal that will see €50m invested in the 455-acre estate. The estate was put on the market in February 2016, with an asking price of €10m (and additional debt of approximately €1m). The new owners run a very successful west of Ireland business dynasty, and also own the four-star Hotel Westport in the county. They have not indicated what they intend to do with the property and surrounding lands, but have stated that they will continue business as usual, and will ultimately invest up to €50m in new facilities over the next five years. The sellers, the Browne family, have run the house since the early 1960s, however difficulties arose after 380 acres of the estate were provided as security on a €6.5m loan taken out by a family member. The loan was subsequently acquired by NAMA, who included it in its Project Arrow portfolio. The property was withdrawn from the portfolio just 24 hours before it was sold to Cerberus following intervention from the Government, amid local fears that the estate could be broken up. The Irish Times, 27th January



DFS Showrooms, Limerick: The DFS showrooms in Limerick City, located on Ballysimon Road, have been sold to a private investor for €2.8m. The high-spec building extends to 22,118 sq. ft. over three floors and contains customer car parking to the front and staff car parking to the rear. DFS currently pay an annual rent of €225k on a 15-year lease running from November 2015. The Irish Times reports that the purchase price will offer the new owners a yield of 7.6% p.a. The Irish Times, 25th January 

Howl at the Moon: Press Up Entertainment has purchased the Howl at the Moon pub in Dublin city centre from the Mercantile Group for approximately €3.2m. Press Up acquired the well-known venue on Mount Street in Dublin 2 using a new entity, Shortford. The pub was previously owned by Mercantile company Lunam Management (which had debts of €2.5m), and has 30 employees. The Irish Times, 27th January


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