4th August (Issue 6)
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 Jewel:
NAMA has shortlisted five bidders for its €2.4bn par value Project Jewel portfolio; Allianz Real Estate, Hines, Hammerson, Davidson Kempner and Colony Capital. Bloomberg has also reported that Hines are bidding for the portfolio on a joint venture basis with the Kuwait Investment Authority. With investment banks such as BAML and Morgan Stanley keen to lend against Dundrum Town Centre, the equity cheque required by the successful bidder may only be a fraction of the expected €1.6bn – €1.7bn purchase price. CoStar Finance, 30th July
Project Poseidon:
Lloyds have announced that they are to sell their final loan portfolio to Goldman Sachs, CarVal Investors and Bank of Ireland. The majority of the commercial property portfolio is to be purchased under a joint venture between Goldman and CarVal, who are to pay c. €1.18bn for c. €3.7bn of assets (68% discount). In a separate transaction Bank of Ireland are to purchase c. €200m of performing loans. Project Poseidon consists of c. 5,000 loans to c. 3,500 borrowers and reported a pre-tax loss of c. £130m for year ended 31 December 2014. The sale will leave Lloyds with less than £30m of commercial property exposure to the Irish market. CoStar Finance, 30th July
Project Arch:
Deutsche Bank have been chosen as the preferred bidder for NAMA’s €608m par value Project Arch loan portfolio. Deutsche’s bid of €164m reflects a discount of 73% for the non-performing loan portfolio. Project Arch consists of loans to five developers with the majority of the loans and assets attributable to Jerry O’Reilly, Terry Sweeney and Ronan O’Caoimh. The portfolio generates cumulative rental income of €3.83m and EBITDA of €4.51m. The key assets in the portfolio include the four star, 261 bed Radisson Blu Hotel & Spa in Galway and the four star, 118 bed Kilkenny Ormonde Hotel. CoStar Finance, 31st July
OFFICE
The Liffey Portfolio:
CBRE are guiding €57.5m for four NAMA office properties located in Dublin City which have rental income of €2.73m p.a. The properties are located at Kilmainham, Pearse Street, Sir John Rogerson’s Quay and Schoolhouse Lane with a total floor area of 157,534 sq. ft. The current vacancy rate of 20% means there is potential to significantly increase the rental income from the portfolio, with the current yield of 4.5% forecasted to rise to 6.6% upon full occupancy. The properties are also available to be purchased on an individual basis. The Irish Times, 29th July
Docklands Development Site:
The $85bn real estate investment firm Hines, together with NAMA, is to seek planning permission for c. 500,000 sq. ft. of prime office space, 165 apartments and a 169 bed hotel. The development is proposed at North Wall Quay, Dublin 1, on a site which is run by receivers Luke Charleton and David Hughes of EY. Should the development proceed the hotel is to be located on the site of the former British Rail Hotel building adjacent to a nine-storey office block and a seven-storey mixed-use building. The Sunday Business Post, 2nd August
HOTELS
Clarion Hotel:
Joint agents CBRE and Savills are guiding €30m for the sale of the four star Clarion Hotel in Cork City. The 191 bed hotel, which was opened in 2005, enjoys a prime waterfront location in the heart of Cork City. The current operators of the hotel are the Choice Hotel Group. The Clarion is let to Merzolt Limited at €2.4m p.a., with c. 25 years remaining on the lease. Based on the lease agreement the Clarion offers a net initial yield of 7.66%. The Irish Times, 29th July
InterContinental Hotel:
The operator of the InterContinental Dublin (formerly Four Seasons), InterContinental Hotels Group, has held initial talks with Starwood Hotels & Resorts to create the world’s largest hotel group. Starwood is believed to be holding talks with a number of parties over a possible merger, with US hotel group Wyndham a strong candidate. InterContinental Hotel Group has a market capitalisation of $9.5bn. The Irish Times, 31st July
Glenroyal Hotel:
The Glenroyal Hotel in Maynooth, Co. Kildare has been sold to The Comer Group for close to its €10.5m asking price. The 3 star, 113 bed hotel comprises three storeys with a total floor area of c. 130,820 sq. ft. The sale of the hotel, which formed part of NAMA’s Crystal Collection, was completed under the instructions of receivers Michael McAteer and Paul McCann of Grant Thornton. NAMA’s Crystal Collection is a seven-hotel portfolio with a cumulative guide price of €35m. The Irish Independent, 29th July
Glenoaks Hotel:
The two star, 36 bed Glenoaks Hotel in Galway has been brought to market by O’Donnellan & Joyce, who are guiding €1.5m for the property. The hotel can either be purchased with the current tenant in situ or alternatively with vacant possession from February 2016. With NUI Galway in close proximity there is also development potential to convert the property into student accommodation, subject to planning permission. The Irish Times, 29th July
RETAIL
Cork City Development:
John Cleary Developments have been granted planning permission by Cork City Council for their proposed €50m redevelopment of the former Capitol Cinema site in Cork City. Once complete the 85,000 sq. ft. site will feature three floors of retail units with 36,000 sq. ft. of high-spec office space. The developer, John Cleary, has advised that negotiations for pre-lets of the retail and office units are at an advanced stage. The Irish Examiner, 29th July
RESIDENTIAL
Price Growth:
Ratings agency S&P predict that the housing market in Ireland will report the strongest rate of growth across the Eurozone in 2015, with growth of 9% projected. This figure is higher than fellow member countries such as Germany (5%) and Portugal (4%), and also above the UK (7%). The rate of growth in Ireland is expected to slow to 5% in 2016 and 3% in 2017. S&P however have noted the effects of the new mortgage criteria imposed by the Central Bank, with house prices in Dublin flat over the first seven months of the year. The Irish Times, 31st July
Housing Affordability:
The State’s Housing Agency has deemed that properties in Dublin, Kildare and Wicklow are no longer affordable. For properties to be affordable a two income household should be able to service a 30 year mortgage on less than 17% of their combined net income. Houses in Dublin now cost 29.5% of income, just shy of the 2008 level of 30.3%. The agency also believes that a minimum of 63,000 properties need to be built in Ireland over the next three years, with Dublin accounting for 50% of the requirement. The Irish Times, 30th July
DIT Accommodation:
Global Student Accommodation, who operate tens of thousands of student beds worldwide, have paid c. €5m for a site near the new DIT Campus at Grangegorman. The group are expected to submit a planning application to develop hundreds of student bedrooms on the 1.86 acre site, for which they are believed to have paid well above the €4.25m guide price. The new campus is to be used by more than 10,000 DIT students when it opens in 2017. The Sunday Times, 2nd August
OTHER
Investment Returns:
Irish investment properties achieved total returns of 6.3% in Q2 2015, according to the latest report by MSCI. The office market was the strongest performer, with 7.4% growth recorded for the quarter and 37.7% year on year. The industrial sector also performed admirably, reporting growth of 2.5%. Prime retail rents on Grafton Street were up 4.4%, while values on the street have risen by 49% over the past 24 months. The Irish Times, 29th July
Facebook Data Centre:
Meath County Council have granted planning permission to Facebook for the development of their proposed €200m data centre campus in Clonee, Co. Meath. The data centre is to be constructed in two phases over ten years on a 220 acre site. The development has been hailed as a major success for Meath due to the significant employment opportunities it will create whilst under construction. The Irish Times, 31st July
Convention Centre:
The Irish Infrastructure Fund have purchased a contract to operate the Convention Centre in Dublin. The contract will expire in 2035 and the fund is believed to have paid c. €100m to complete the transaction. The sale of the contract also includes a licence to build a 330 bed hotel on an adjacent site. The Office of Public Works own the building itself, which has hosted over 1,100 events since first opening in September 2010. The Irish Times, 1st August
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