31st October (Issue 120)
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
Goldman Sachs (GS) / Pimco Portfolio: After recently acquiring a c. €1.8bn loan portfolio from Danske Bank for c. 95c in the Euro, the GS-Pimco consortium is expected to securitise some or all of the loan portfolio in Q1 2018. The portfolio, which contains c. 13,000 loans, of which c. 10,000 were family home mortgages and the remainder were buy-to-let mortgages, was sold by Danske to an entity called Proteus Funding. Should the GS-Pimco consortium securitise the entire portfolio, it would be the largest securitisation of Irish mortgages since the economic downturn. Permanent TSB completed a c. €500m residential mortgage-backed securitisation earlier this month, attracting an effective negative yield. The Irish Independent, 26th October
RETAIL
National Retail Assets: The Sunday Times highlights a number of retail assets in Ireland which have failed to sell in the past year, and draws insights from industry experts as to why they have failed to transact. For assets such as Blackpool shopping centre in Cork (c. €117m asking price), Navan Town Centre (c. €60m) and Fairgreen retail complex (c. €12m) in Westmeath, it is believed the asking price was too high, with Blackpool only attracting bids in the region of €105m. Industry analysts are suggesting that one of the reasons why these assets aren’t being sold at their asking prices is because their private equity acquirers are often not undertaking the necessary asset management to justify the increase in value. The Sunday Times, 29th October
Arnotts 2016 Figures: The 2016 accounts for the Arnotts retail store in Dublin city centre show that turnover increased by 5.3% to €75.3m, largely due to continued investment in the store by the Selfridges Group. Selfridges invested c. €2.5m in 2016, an increase of over €1m YoY. The investment saw the introduction of additional brands such as Mac and Charlotte Tilbury, as well as store improvements and technology upgrades. Although the group recorded an operating loss of €523k in the store for the year, this was largely due to one-off expenses and the hiring of additional employees to facilitate the investment in the store. The Irish Independent, 29th October
80 Grafton Street: Cushman & Wakefield is guiding €9m for 80 Grafton Street, a corner store next to Bewley’s Café in Dublin city centre. The property produces rental income of €275k p.a. and is leased to Molton Brown. The company have completed three years of a 15-year lease of the building, which extends to 915 sq. ft. at street level and 4,205 sq. ft. over five floors, including the basement. The current rent equates to €410 psf, well below the standard Zone A rental rate of €650 psf, and there is a rent review in October 2019. The new owners can expect a current net yield of 2.81%, a figure which should increase to 4.25% after the upcoming rent review. The Irish Times, 25th October
Carlow Mixed-Use Building: Murphy Mulhall is guiding €2.65m for a modern mixed-use building with retail, offices and apartments located at 38 – 42 Tullow Street in Carlow. The building extends to 37,152 sq. ft. and the entire ground floor and part of the first floor are let to Dealz on a 10-year lease. The remaining office space is vacant, however 15 two-bedroom apartments are fully occupied. The current rental income is €248k p.a., offering a yield of 8.62%. The Irish Times, 24th October
OFFICE
The Sentinel Building: Dún Laoghaire-Rathdown County Council has granted permission to Dante Property Company to complete The Sentinel Building, a landmark 14-storey building in Sandyford, south Dublin, which has been an unfinished shell for a decade. The company, which is owned by Luke and Brian Comer, will redevelop the building as 294 ‘office suites’, each of which will contain a kitchenette, bathroom and an ‘overnight stay’ facility. Work commenced on the Sentinel in 2007, but was halted in 2008 when an examiner was appointed to the developer, leaving only the outer shell of the building completed. The Irish Times, 26th October
One Molesworth Street: The aviation company Goshawk is expected to join Barclays Bank Ireland in Green REIT’s One Molesworth Street property after they agreed terms for 12,800 sq. ft. of space. Goshawk will occupy the fourth floor of the property and will also lease five car parking spaces under a 20-year lease, which contains a tenant-only break option at the end of year 13. The rent under the lease is €850k p.a., which equates to €65 psf for the office space and €4.4k for each car space. There is a nine-month rent-free period at the start of the lease. The Irish Times, 31st October
Department of Justice and Equality HQ: Kennedy Wilson is reportedly set to purchase the HQ of the Department of Justice and Equality on St Stephen’s Green in Dublin for close to the €20m asking price. This will increase the company’s strategic hold on much of the south side of St Stephen’s Green, where it already owns the adjoining KPMG headquarters. The sale covers a series of relatively modern buildings which were developed behind the façade of the former Methodist Centenary Church. The buildings are occupied by the OPW under two co-terminus leases which have a combined rent roll of €1.02m p.a., equating to €45.85 psf. The Irish Times speculates that the new owners will likely seek planning permission to modernise and extend the complex when the current leases expire next June. The properties are being sold by SW3 Capital. The Irish Times, 25th October
Bishop’s Square: Hines has begun the construction of an extension to their Bishop’s Square office block, which is located at the junction of Camden Street and Aungier Street in Dublin 2. The extension will see the total floor area increased from 153,000 sq. ft. to 180,000 sq. ft. With works underway, Hines has asked Cushman & Wakefield and BNP Paribas Real Estate to commence the marketing of new lettings, with the rents set at €52 psf for the office space and €3,750 for the car spaces, with 44 currently available. Hines acquired the property in 2015 for €92m. The Irish Times, 24th October
Dún Laoghaire Ferry Terminal: The old Ferry Terminal in Dún Laoghaire, south Dublin is expected to be redesigned into a Canary Wharf-styled hub suitable for multinational companies and technology, design and marine-based enterprises, with the hope that it will create up to 1,000 jobs. The redesign will see the terminal become a 75,000 sq. ft. harbour innovation campus which hopes to be the largest co-working space in Ireland. Businessman Philip Gannon is believed to be driving the new scheme. The Irish Independent, 29th October
Sandwith Street Upper Development: Rails Investment Ltd has registered an application with Dublin City Council for the development of a 115,000 sq. ft. office property on Sandwith Street Upper in Dublin city centre. The development would take place on the site of a former 20,000 sq. ft. post office, which would be demolished to make way for the new, four-to-seven storey over-basement property. The application mentions that Rails Investment Ltd is acting in trust for an unidentified principal. NAMA Wine Lake, 29th October
HOTEL
Jurys Inn Sale: The Sunday Business Post reports that the Swedish hotel company Pandox is among the bidders for the Jurys Inn hotel brand, which is owned by Lone Star and managed by Amaris. The brand was put up for sale earlier this year with a price tag of c. €1bn, and a buyer is expected to be chosen by the end of the year. Most of the Jurys Inn hotels are in Britain, although there are six in Ireland and one in the Czech Republic. Pandox owns more than 120 properties in Sweden, Norway, Finland and Germany. The Sunday Business Post, 29th October
Jacobs Inn Hostel: Tetrarch Capital is believed to have sold Jacobs Inn Hostel on Talbot Street in Dublin city centre to the international private equity fund Patron Capital LLP for c. €14.5m, €1m above the €13.5m guide price. The hostel contains 428 bed spaces and is located within close proximity to a range of public transport options including Connolly station, a Red Line Luas stop and Busáras, Dublin’s main bus station. The Irish Independent, 26th October
Brian McGettigan (BM) Hotels: BM is planning to spend c. €15m adding 87 bedrooms to the 129-bedroom KingsWood Hotel in Dublin’s Citywest. While the expansion is subject to planning permission, BM is hoping that work will commence in early 2018. The news comes on the back of the completion of a €20m investment in The Address, an 80-bedroom hotel in Dublin 1. The Sunday Business Post, 29th October
Scruffy Murphy’s: Dublin City Council has granted planning permission for the demolition of Scruffy Murphy’s pub on Mount Street and the construction of a new aparthotel in its place. The developer sought planning permission for a six-storey building containing 36 suites with self-catering facilities, however the council ruled that one of the floors must be omitted from the permission granted. The development will also include a restaurant, bar and café on the ground floor. The Irish Independent, 26th October
RESIDENTIAL / LAND
Dublin Living Portfolio: Marlet Property Group is in talks with a multinational investor to sell 1,205 apartments under construction in Dublin for c. €450m. The company put the ‘Dublin Living’ portfolio of apartments, located on four different sites in Dublin, up for sale in June 2017, with an asking price of €425m. The company has confirmed it has entered exclusive talks with an international buyer, but has not named the potential purchaser. The Irish Times reports that industry sources have identified four candidates – Round Hill Capital (who are believed to be the leading candidate), Greystar, Tristan Capital and Ivanhoe Cambridge. The apartments are located on four sites – St Claire’s and Mount Argus in Harold’s Cross, Carriglea on the Naas Road and Cabra Road. Building work is underway on three sites, and is just about to commence on the Cabra Road site. If completed, the transaction would be the largest of its kind in the country. The Irish Times, 25th October
Kennedy Wilson Construction Loan: Kennedy Wilson has secured a €45m construction loan at an interest rate of just over 2% to facilitate the development of phase three of the Clancy Quay development in Dublin 8. Kennedy Wilson will pay interest of 2.03% on the facility, which will mature in 2025. The third phase of the Clancy Quay project will see the development of 259 residential units, following the development of 423 units in phase one and 163 units in phase two. The Irish Independent, 28th October
Dublin 8 Site: An unnamed buyer has paid c. €2.5m for a ‘ready-to-go’ development site near St James’s Hospital Campus in Kilmainham, Dublin 8. The 0.64-acre site is situated on Brookfield Road and has planning permission for 11 residential units and c. 24,000 sq. ft. of office space. The Sunday Business Post, 29th October
New Mortgage Lending Figures: A new report by the Central Bank shows that new mortgage lending by the five main banks in Ireland was up 33% in H1 2017 when compared with the same period in 2016. The five main banks in featured in the report were AIB (including EBS), Bank of Ireland, Permanent TSB, KBC and Ulster Bank. The data shows that almost 14,997 new loans totalling €3.05bn were extended during the period. The average first-time buyer is now taking a loan of just under €200k, and paying €265k for their property, compared with corresponding figures of €180k and €246k in H1 2016. Central Bank of Ireland, Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2017
Frascati Shopping Centre: Invesco Real Estate is seeking planning permission to build 45 apartments on top of the Frascati shopping centre in Blackrock, south Dublin. The company is planning to add three floors of apartments on top of the existing two floors of retail and restaurant space. The new apartments will consist of three one-bedroom apartments, 36 two-bedroom apartments and six three-bed units, all of which will contain balconies. The company advise that the new apartments would be an extension of the overall Frascati ‘rejuvenation scheme’ which has been approved by planners thus far. A €30m refurbishment and extension of the centre is currently in progress, which will increase the lettable space from c. 101,000 sq. ft. to c. 172,000 sq. ft. The Sunday Times, 29th October
Ballinteskin Stud: Luke Comer has purchased Ballinteskin Stud in Co. Wicklow at auction for €2.53m, slightly above the AMV (advised minimum value) of €2.5m. The estate, which is located on 120 acres near Enniskerry and Roundwood, includes a six-bed Georgian house in walk-in condition, 32 stables, indoor and outdoor arenas and a helicopter hanger and landing pad. Ballinteskin has operated as a stud farm for more than 40 years, and was previously placed on the market for €14m in 2008, but failed to sell. The property is located a short distance from Kilternan Sports and Leisure complex, another investment by Mr Comer. The Irish Times, 25th October
Goodbody BER Housebuilding Tracker: The latest Goodbody BER Housebuilding Tracker, which is based on Building Energy Rating certificates, has shown that house building remains substantially below official estimates. However, the tracker has shown that there was a significant growth in housing completions in September 2017, with 1,049 residential units being completed, which represents growth of 86% YoY. Figures for YTD show that 6,447 units have been completed, demonstrating YoY growth of 78%. The Irish Times, 26th October
INDUSTRIAL
JLL Q3 2017 Report: JLL’s Q3 2017 report on the Dublin industrial market shows that take-up totalled 407,904 sq. ft. in the quarter, across 33 deals. The figures represent a decrease of 42% QoQ, with take-up of 707,922 sq. ft. recorded across 44 deals in Q2 2017. The total take-up YTD is 1.6m sq. ft., a decrease of 16% YoY. The largest transaction was the letting of the 103,000 sq. ft. Unit 624 Northwest Business Park, in Ballycoolin. Both prime and secondary rents increased in the quarter, and stand at c. €8.75 psf and €6.75 psf respectively. JLL Dublin Industrial Market Report – Q3 2017
Former Electrolux HQ: The former Dublin HQ of Electrolux has been sold to a private investor for €4.5m, a 12.5% premium on the €4m guide price. The property, located on the Naas Road, extends to 92,130 sq. ft. and sits on a high-profile 4.7-acre site. The building fronts on to the Naas Road, which links directly to the M50. The Irish Independent, 26th October
OTHER
Trinity Street Portfolio: A portfolio containing the busy Trinity Street car park off Dame Street in Dublin city centre, three retail units and four office suites is to be offered for sale through CBRE with a guide price in excess of €17.3m. Based on this guide price, the portfolio will show an initial return of 4.9% allowing for standard purchasing costs (including the new 6% stamp duty). The rental income from the portfolio is €920k p.a., of which €636k is apportioned to the car park, with the remaining €284k coming from the shops and offices. The 171 space car-park is one of the busiest in the city due to its close proximity to Grafton Street and Temple Bar, while the best-positioned retail units are let to Pichet restaurant and Excel Dry Cleaners. The three ground-floor units extend to 5,275 sq. ft., while the four self-contained office units on the upper floor have a combined floor area of 2,060 sq. ft. The Irish Times, 25th October
Bid X1 Online Auction: Some €50m – €60m of sales activity is expected to be generated in a major Bid X1 online auction on the 9th and 10th of November. The auction will contain 124 commercial lots and 193 residential properties over a two-day sales process. The largest commercial offering is a 10-acre Rathfarnham development site, which is guiding €2.75m. The Irish Examiner, 26th October
Dublin / Leinster Auction Activity: The Sunday Business Post reports that public auction activity in recent days generated €18.6m from the sale of 38 lots of Dublin and Leinster properties. Sherry FitzGerald’s catalogue saw 10 of its 12 lots sold with combined values of €4.9m, Real Estate Alliance (REA) sold 21 of 25 offered lots for c. €4m, while REA Coonan generated €7.8m from the sales of two stud farms and lands in Kildare and Wicklow. As a separate transaction, Sherry FitzGerald also sold a five-bedroom detached family home in Clontarf in Dublin 3, for c. €1.8m. The Sunday Business Post, 29th October
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