4th July (Issue 103)
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
GE Capital Irish Mortgages: Specialist buy-to-let lender Dilosk has acquired c. €160m of owner-occupied loans that originated from US Group GE Capital’s former Irish subprime loan book. The 1,200 performing mortgages involved will continue to be serviced by the Australian firm Pepper, which bought GE’s c. €600m Irish mortgage portfolio in 2012, at a c. 60% discount. Dilosk previously purchased Bank of Ireland’s ICS Mortgages brand in 2014. The Irish Times, 1st July
Danske Bank Loan Book: The Irish Independent reports that Danske Bank is considering selling more than €2bn of performing Irish home loans and buy-to-let mortgages as it continues to wind down its Irish retail banking business to focus solely on the corporate and institutional markets. The paper reports that Danske Bank is understood to be considering either a portfolio sale or rolling the loans into a securitisation deal, with Morgan Stanley advising the bank. It is believed that any deal is likely to be concluded by the end of 2017. Bank of Ireland is reportedly viewed as a logical purchaser of the loans, given that it has already purchased c. €274m of performing commercial loans from Danske Bank in 2015, as part of a wider c. €540m disposal, with Goldman Sachs acquiring the remaining c. €266m. Sources have indicated that the portfolio will include some buy-to-let loans in addition to primary residential mortgages. It is also believed to include a significant number of tracker mortgages, which could have an impact on the final sale price of the portfolio given the low profitability associated with such loans. The Irish Independent, 29th June
RETAIL
Salamanca Restaurant: Salamanca, a well-known tapas restaurant and bar on Andrew Street in Dublin 2, has been sold to a private investor for slightly over the guide price of €2.8m. Agents Bagnall Doyle McMahon handled the sale of the four-storey over-basement building, which is held on a 25-year lease from 2014, with five-yearly rent reviews. The current rent is €155k p.a., and the first rent review in March 2019 will be linked to the Consumer Price Index, with subsequent reviews determined by open-market rent values. The Irish Times, 27th June
Avoca Expansion: Avoca plans to open two to three new stores in the next 24 months, according to its managing director, Simon Pratt. Mr Pratt announced the intentions for the firm’s expansion whilst commenting on newly filed accounts for the 11 month period ending January 5th 2016, which show that turnover increased by c. 3% to c. €60m. Mr Pratt also advised that the company’s most recent store opening in Dunboyne, Co. Meath, is trading well, and that the business is actively looking for more sites for new openings. The Irish Independent, 1st July
OFFICE
The Sorting Office: CBRE are seeking €152.8m for ‘The Sorting Office’, a 203,700 sq. ft. office development currently under construction on the site of a former An Post sorting depot in Dublin’s south docklands. The building, which is being developed by Irish property group Marlet and M&G investments, will contain office accommodation over eight levels, 26 car parking spaces and room for 318 bicycles. The purchase price equates to c. €750 psf based on vacant possession, however CBRE and Marlet expect a number of letting agreements to be signed before the sale is completed, which will likely push the purchase price up. The sale price would offer a significant return for Marlet and M&G investments, who acquired the site from An Post two years ago for c. €40m. The Irish Times, 29th June
Athlone Research Centre: The long-established Ericsson research and development facility in Athlone, Co. Westmeath has been sold to an international investment firm with Irish links for slightly over the €19m guide price. The property is let to Ericsson on a 25-year lease from 2002. The current rent is c. €2m p.a., offering the investor c. 10 years of secure rental income. The next rent review occurs in 2022, and the lease provides for a minimum rental uplift of 10%, or open market rental value, whichever is higher. The guide price of €19m would provide the purchaser with a minimum net initial yield of c. 10% until 2022, and c. 11% thereafter. The facility is a campus-style development occupying 15.23 acres, which consists of two connecting office and software development facilities and a detached communications building. The Irish Times, 30th June
Plassey Portfolio: Agents Power & Associates are guiding €25m for the Plassey Portfolio, which consists of three modern office buildings in the National Technology Park in Limerick. The buildings, known as Civic House, Hamilton House and Hamilton House Block 2, will show an initial yield of c. 7%, after allowing for purchasing costs of 4.46%. The buildings in the portfolio date from 1998, 2006 and 2015, have a net floor area of 133,432 sq. ft. and are available to purchase in one or more lots. They currently have an occupancy rate of 92% from a strong tenant line up including Northern Trust, Cook Medical, QAD and Icon. The current rent roll is c. €1.84m p.a., however there is scope to increase this in the short term by conducting a number of rent reviews and letting 10,000 sq. ft. of vacant space in Civic House. The Irish Times, 28th June
Park Collection: Cantor Fitzgerald Ireland Ltd, through the Cantor Park Commercial Property Fund (the “Fund”), has successfully completed the acquisition of the Park Collection in Carrickmines, Co. Dublin. The Park Collection comprises of four modern office buildings totalling 130,000 square feet, let to a mixed portfolio of tenants with excellent transport links via access to the M50 and the LUAS. The investment strategy of the Fund is to re-gear the current tenancy profile across the portfolio with the aim of increasing the current passing rent to an average passing rent level of c. €26 psf and improve the weighted average unexpired lease term from the current level of c. 2.5 years. The expected term of the investment should be c. 5 years. The acquisition price for the Park Collection was €41.5m (inclusive of costs) and this was financed by €20m in private equity raised by Cantor Fitzgerald and a €21.5m loan facility from Rietumu Bank. Cantor Fitzgerald, 30th June
Former EBS Offices: The former HQ of EBS Building Society has been sold to a private fund for approximately €9m. The 1980s building, located on Townsend Street in Dublin 2, extends to 24,370 sq. ft. and is located in an area of the city which is expected to undergo significant changes over the next few years. Brown Corrigan Chartered Surveyors, who acted for the new owners, have advised that they plan to upgrade the building, despite it being in generally good condition. The Irish Times, 27th June
Fenian Street: CBRE is guiding in excess of €5m for a five-storey building at 9-10 Fenian Street in Dublin 2. The c. 11,600 sq. ft. building, which is currently let to Hibernia College, has planning permission for a c. 24,000 sq. ft. redevelopment of the site. There is a landlord break option on the current lease in 2018. The Irish Times, 27th June
Molesworth Street: The Irish Times reports that IPUT has pre-let 40 Molesworth Street in Dublin city centre to Jet.com, the US online retailer. Jet.com has reportedly agreed to a 20-year lease for 30,000 sq. ft. at a rent of c. €1.8m p.a. (c. €60 psf). IPUT acquired the property in March 2013 for c. €8.4m. A full redevelopment of the property has since been undertaken, for which the total cost is expected to be c. €13m. Once the redevelopment has been completed, the property is expected to be valued at over €40m. The Irish Times, 4th July
Donnybrook Flagship Centre: Planning permission has been granted for a mixed-use flagship centre in Donnybrook, Dublin 4, which will contain offices, a large restaurant and café and a double basement gymnasium. UK Companies U+I and Colony Northstar made the application to redevelop the existing Donnybrook House after purchasing it in 2014, and now plan to spend c. €16m redeveloping the property, which will have 45,000 sq. ft. of high-quality office space over five floors. In addition, the building will have a 4,000 sq. ft. restaurant, a café of c. 2,000 sq. ft., a 20,000 sq. ft. gym, secure bicycle bays, parking and internal courtyards. Colliers International will quote a rent of c. €45 psf for the office space, which will be ready for fit-out in Q1 2018. The Irish Times, 27th June
Barclays EU Hub: The Irish Times reports that Barclays is likely to settle on Dublin’s Dawson Street as the location for a post-Brexit EU hub if UK finance companies lose easy access to the European Trading block. The bank has agreed rental terms with Green REIT for most of the office space of One Molesworth Street, a high profile building under construction on Dawson Street. Barclays is believed to have agreed a rent of slightly above €55 psf for c. 60,000 sq. ft. of office space in the building, where the total available office space is believed to be c. 71,000 sq. ft. Barclays’ office space is expected to be able to facilitate c. 400 employees. The planned move coincides with the announcement that London-based Caprice Holdings will open a branch of The Ivy Collection on the ground floor of the same building. The company have agreed a rent of €500k p.a. for 5,000 sq. ft. of primary retail space on the ground floor, and a further 4,000 sq. ft. at basement level. The Irish Times, 28th June
Bank of China: Bank of China has opened a Dublin branch, which will focus on corporate lending and target Chinese companies operating in Ireland, Irish groups with interests in China and large multinationals with offices in Ireland. The 64% state-owned bank already has a presence in Ireland through its aircraft leasing operation BOC Aviation (Ireland), which will continue to operate as a separate business. The Irish Times, 28th June
HOTEL
Hotel Sales: New figures from CBRE show that 18 hotels were sold in the first six months of the year, generating cumulative sales proceeds of c. €75m. In the same period of 2016, 29 hotels with combined sales proceeds of c. €136m were sold. Hotels sold as investment sales were excluded from the figures. The most valuable hotel sold in H1 2017 was Mount Wolseley Hotel Spa & Golf Resort, Tullow, Co. Carlow, which had been guiding €14.25m. The Irish Times, 3rd July
Tifco Deutschland: Banesto, the company owned by DID Electrical founder Gerry Houlihan and accountant Aidan Crowe, sold a portion of its shareholding in Tifco Deutschland for c. €6m in 2016. Tifco Deutschland is a hotel operator under which Tifco manages a number of hotels under the Crowne Plaza, Hilton, Travelodge and Holiday Inn Express brands. The Sunday Business Post, 2nd July
RESIDENTIAL / LAND
Liberties Dublin Redevelopment: Planning permission will shortly be lodged for a c. 400,000 sq. ft. development in the Liberties area of Dublin, which is expected to cost c. €200m. The scheme will include a 239-bedroom hotel, an indoor market, a micro-brewery, retail and office space and residential accommodation. The project will have a regeneration element, which will include the demolition of the 1970s enterprise centre and work on Mill Street. Interest in the area has risen in recent months since Dublin City Council announced its plan to develop a ‘high quality, multi-functional market square and city wide destination’ in the area. The Irish Times, 3rd July
Development Land Transactions: CBRE reports that there has been a sharp drop in the value of development land transactions completed in H1 2017. Their figures show that 50 development land transactions with a combined value of c. €269m took place during the period, compared with 53 transactions totalling c. €489m in the corresponding period last year, when a number of large transactions occurred. The Irish Times, 3rd July
Oaktree Development Fund: The Sunday Business Post reports that Oaktree Capital is aiming to float a large Irish property fund this autumn. The company is reportedly working with Irish developer Bridgedale, with Credit Suisse and Davy retained as advisors. Market sources have estimated the initial fundraising target to be c. €200m, and the aim is to launch a listed Irish homebuilder on the Irish, and possibly London, stock exchange(s). It is believed that the new venture is seeking a linchpin seed asset for the plan. Bridgedale was a close underbidder for the recently sold nine-acre RTE site, and the Sunday Business Post reports it will likely seek to develop an alternative large site, with c. €100m of Cerberus-controlled development prospects suggested as one possibility. The Sunday Business Post, 2nd July
Deepwell, Blackrock: Deepwell in Blackrock, one of Dublin’s best known properties which sits on a 2.38-acre site, has been put on the market with an asking price of €13m. The current owners of the 5,750 sq. ft. property, Cynthia Chua and Nick Holman, are hoping to improve the return on their investment by selling Deepwell as a development opportunity. The owners have engaged Plus Architects to conduct a feasibility study for a 42-unit apartment scheme, which will offer a developer a net revenue of c. €51m. The proposed 42-unit scheme would be pitched at the high end of the market, with prices for 12 one-bed units ranging between €545k – €695k, 22 two-bed units priced between €775k and €1.15m and eight three-bed units priced between €950k and €1.35m. The Irish Times, 29th June
Ballymun Road: A 3.84-acre strategic site at the Ballymun Road entrance to the Northwood Business Campus in Santry, Dublin 9, has been put on the market for more than €3m through Knight Frank. The site is 600m from Junction 4 of the M50, 200m from a planned Metro North stop and has easy access to Dublin Airport, the Port Tunnel and DCU. The site could potentially be developed to facilitate offices, residential, student accommodation or retail, or a combination of all four, subject to planning permission. The Irish Times, 3rd July
Foxrock Residential Site: Savills is guiding €3m for a 0.62-acre site in Foxrock, Dublin 18, which has planning permission for 20 apartments and duplex units. The planning permission permits the development of 16 two-bed apartments extending to 915 sq. ft. and four three-bed duplexes extending to 1,243 sq. ft. Savills have advised that the typical selling prices for the apartments and duplexes range from €575k – €725k, which would give the development a gross value of over €12m. The Irish Times, 28th June
Glenageary House: Colliers International are inviting offers of €2.7m for a 0.98-acre site located within the walls of the former Glenageary House in Glenageary, south Dublin, which was demolished in the 1970s. The site is zoned for residential development, and the agents advise that the site has potential for an exclusive housing scheme, subject to planning permission. The Irish Times, 27th June
Stoneybatter Student Accommodation: Gurtmont Ltd has applied to Dublin City Council to develop a five-storey, 35,000 sq. ft., 96-bedroom student accommodation complex in Stoneybatter. The complex will be located on Mount Street, and will involve the demolition of existing properties on the site. Gurtmont is controlled by Enda Bannon, Niall McHugh, Barry O’Connor and Aoife O’Gorman. NAMA Wine Lake, 2nd July
Malahide Road: Dublin City Council has lodged a planning application to construct 150 new apartments on a three-acre site on Malahide Road in Belmayne, north Dublin city. The development will consist of a number of six-storey blocks, comprising 50 one-bed, 81 two-bed and 19 three-bed units. The application is understood to be the first residential application by Dublin City Council in two years. NAMA Wine Lake, 2nd July
Daft.ie House Price Report: A new report by Daft.ie warns that house prices will continue to rise for the next five to 10 years, unless ‘drastic’ action is taken. The report warns that the market is unlikely to stabilise, and that prices in Dublin will continue to rise more quickly than the rest of the country, because we have ‘regulated ourselves out of the volume of homes that are needed’. Based on the findings of the report, house prices have risen more in the first six months of 2017 than they did in all of 2016, with prices c. 8.8% higher at the end of Q2 2017 than in December 2016. With regards to the types of property the country needs, Daft.ie chief economist Ronan Lyons has stated that Dublin in particular doesn’t necessarily need any more three-bedroom semi-detached properties, but that the properties that are needed, like apartments, are difficult to build and heavily regulated. The Irish Times, 30th June
MyHome.ie House Price Report: A new report from property website MyHome.ie and Davy suggests that house prices are now rising by an average of €4,000 per month. Their figures show that national property prices are up by 8.9% YoY, while Dublin prices are up 10.3% YoY. The average monthly jump in values recorded on newly listed properties in the last six months was more than double that registered by Daft.ie in their recent report, however the disparity may be due to MyHome’s greater focus on Dublin properties, where the monthly price hike was put at over €5,000. The report also warned of a possible ‘rush in transactions’ as first-time-buyers seek to avail of the Help-to-Buy scheme before its likely abolition in the upcoming budget. The Irish Times, 2nd July
May Mortgage Approvals: The May 2017 report by the Banking & Payments Federation Ireland (BPFI) on mortgage approvals shows that there were 4,124 mortgages approved in May 2017, which had a total value of c. €884m. Based on the value of mortgages approved, these figures represent an increase of c. 45.1% YoY (c. €609m May 2016) and an increase of 29.1% MoM (c. €685m April 2017). Based on the value of mortgages approved, the first-time buyer segment grew by 60.7% YoY (c. €448m May 2017 vs c. €279m May 2016). BPFI Mortgage Approvals May 2017
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