5th December (Issue 125)

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 Ocean: The Sunday Business Post reports that AIB may dispose of family home mortgages in 2018, by way of a loan portfolio sale. The bank is understood to have begun a review of its entire non-performing loan book, in an exercise named Project Ocean. The paper cites sources close to the process as saying that a loan portfolio sale consisting entirely of family home mortgages was unlikely, despite AIB’s half-yearly results showing that the bank’s exposure to non-performing family home mortgages was c. €3.3bn. Of this €3.3bn, the exposure to borrowers in arrears for more than 365 days was c. €1.7bn. The Sunday Business Post, 3rd December

Ulster Bank Consideration: The 2016 accounts for the Cerberus vehicle Promontoria (Aran) show that the company was not required to pay a deferred consideration of €80.7m to Ulster Bank following its purchase of a loan portfolio from the bank in 2014. Promontoria (Aran) paid c. €1.35bn to acquire a non-performing portfolio of loans secured on collateral which was primarily in Ireland, Northern Ireland and Great Britain. As there were deficiencies with the collateral in the portfolio at the time of sale, €80.7m of the purchase price was deferred until these deficiencies were resolved, with a deadline in place for Ulster Bank to meet. The bank is now believed to have been unable to resolve all the issues with the collateral within the required deadline, and the €80.7m payment was therefore not made by the acquiring entity. The Promontoria (Aran) accounts show that the company expects to have worked through all of its loan portfolio by the end of 2018. The Irish Independent, 30th November



Crampton Buildings: A fund managed by Davy Real Estate has paid c. €11.2m to acquire the Crampton Buildings block in Dublin’s Temple Bar, an investment which will initially generate a return of 5.76%. The property, which extends to 17,000 sq. ft., contains ten separate retail and restaurant units. The rental income is currently €700k p.a., with more than 55% of the rent paid by three tenants (Elephant & Castle – €160k, Gallagher’s Boxty House – €120k and Café Nero Ireland – €120k). The €11.2m purchase price is c. €3m more than the price paid by the property’s previous owners, Ardstone Capital and CBRE Global Investment Partners. The previous owners had adopted an intensive asset management strategy, which saw six new leases being signed and rental income increasing by 30%. The Irish Times, 29th November

Blackrock Shopping Centre: Friends First has received planning permission to proceed with a c. €10m upgrade to Blackrock Shopping Centre in south Dublin. The shopping centre, which was built in 1984, currently accommodates 40 retail and commercial businesses, including Supervalu, AIB and Next. The refurbishment, which is expected to commence in Q2 2018 and take 12 months to complete, will see the introduction of a new roof covering and a new stairs and lift, which Friends First hope will increase footfall. Friends First is believed to have originally owned 33% of the site through an investment fund, before the group obtained control of the remainder of the site in 2014 in a transaction believed to be worth c. €50m. The Irish Times, 30th November

Supermac’s Longford: Supermac’s are planning to open their next motorway plaza in Longford town, in a move which would create up to 80 jobs. The announcement comes as the 2016 accounts for Supermac’s Holdings show that the group had 1,447 employees. Group turnover was €137m (vs €116m in 2015) and profitability after depreciation and tax was €13.31m (vs €11.84m in 2015). The Sunday Business Post, 3rd December



No 1 The Landings: The German investor Triuva has emerged as the highest bidder for No 1 The Landings, a new office development which is nearing completion in Dublin’s North Wall Quay. The investor has agreed to pay c. €164m for the ten-storey block, which will extend to c. 143,158 sq. ft. upon completion. The property will be occupied by National Treasury Management Agency, who will pay €50 psf for the office space and €4k p.a. for each of the 44 car spaces. The Irish Times reports that there were 10 bidders for the property. No 1 The Landings represents the first phase of the Dublin Landings development, which will contain more than 1.076m sq. ft. of office space and 297 apartments when completed. The Irish Times, 2nd December

Sandyford Offices: Two unnamed investors have paid €12.25m to acquire two office properties on Arena Road in Sandyford, south Dublin. The properties, Arena House and Trigon House, have a cumulative floor area of 65,000 sq. ft. and rental income of €954k p.a., providing the purchasers with an initial return of c. 7.5%. The tenants include CPL, Mainstream Renewable and Emile Investments. The new owners are hoping to increase the yield on their investment through the regearing of leases in the next year. The Irish Times, 29th November

Capital Dock: The recruitment company Indeed will enter into 20-year leases for over 216,000 sq. ft. of office space currently under construction at the Capital Dock development, which is alongside Sir John Rogerson’s Quay in Dublin’s south Docklands. Indeed’s office space will be at 100 and 300 Capital Dock, and there is expected to be break options in their leases in year 13. No financial details for Indeed’s leases have been disclosed. JP Morgan will also occupy office space in Capital Dock, although they are understood to have forward funded their property, having paid c. €125m, a price which equates to a capital value of c. €961 psf. The Capital Dock site extends to over 4.8-acres and is being developed by Kennedy Wilson in a JV with NAMA and Fairfax Financial Holdings. Upon completion, the development will contain over 690,000 sq. ft. of mixed-use space, including 190 apartments. The Irish Times, 4th December

St George’s Church: Richard Barrett’s Bartra Capital Property Group has acquired St George’s Church on Temple Street in north Dublin for c. €3m. The 19th century church, which extends to 22,000 sq. ft., has recently been let as offices to the adjoining Temple Street Children’s University Hospital for eight years, for a rent of €225k p.a. Bartra will also receive additional income of €35k p.a. from Vodafone and Meteor, who operate communications equipment on the rooftop under licence agreements. The Irish Times, 29th November

The Priory: An unnamed Dublin family has paid c. €2.25m to acquire The Priory on John Street West in Dublin 8. The six storey, 10,021 sq. ft. property was built in 1878 and was previously owned by Projects Architects, whose principal was Ambrose Kelly. The current rental income is €150k p.a., therefore the property will provide a net yield of 6.15%. The new owners will have the opportunity to increase their return by either letting a vacant floor or by increasing the blended rent on the property of €19.50 psf, which is believed to be below the rents from other properties in the area. The Irish Times, 29th November

Citywest Business Campus: Sales agent Colliers International is seeking expressions of interest from prospective tenants for 14,800 sq. ft. of office space and 55 car spaces at 3046 – 3050 Lake Drive in Citywest Business Campus, Dublin 24. Colliers is guiding a rent of €30 psf for the office space and €750 per car space p.a. The Irish Times, 29th November

Law Firm Offices: New figures from The Law Society show that despite the perception that Brexit would lead to an influx of law firms into Ireland, only one law firm, Pinsent Masons LLP, has opened an office in Dublin. While a large number of English and Welsh solicitors have secured a second qualification from applying to join the Roll of Solicitors in Ireland, it is believed that the majority have not done so with the intention of establishing an Irish presence. Instead, by securing an Irish qualification, they will be able to maintain their status as EU law practitioners when Britain leaves the EU. The Irish Independent, 3rd December



The Plaza: An Irish investment company has paid c. €15m (almost €1m over guide) to acquire The Plaza complex in Tallaght, Dublin 24. The Plaza is a mixed-use, six-storey development featuring a four-star, 122-bed hotel with a basement nightclub, in addition to 74,012 sq. ft. of office space. The complex is situated on a 2.8-acre site and extends to 200,779 sq. ft. in total. The cumulative rental income is c. €1.303m p.a., with potential to increase this through the letting of 23,670 sq. ft. of vacant office space. The remaining office space is occupied by the OPW under leases which have over seven years remaining. The complex was sold under the instructions of the receiver, Declan Taite of Duff & Phelps. The Irish Times, 29th November

33 – 36 Dawson Street: The Royal Irish Automobile Club (RIAC) is to partner with Tetrarch Capital to complete a €30m – €35m redevelopment of its premises at 33 – 36 Dawson Street in Dublin city centre. The proposed redevelopment would see 77 new bedrooms added to the club’s hotel, which would be operated by Tetrarch, but would include the RIAC brand in its name. Other aspects of the redevelopment include a new member’s restaurant, bar, offices and a 61-space car park. Subject to planning permission and approval from its members, the RIAC would vacate the premises by the end of June 2019 to facilitate the redevelopment, which would take c. 24 months to complete. The Irish Times, 2nd December

Cork City Hotel: Bam Property Ltd has received planning permission to construct a 220-bed, four-star hotel on the site of the former tax office on Sullivan’s Quay in Cork city centre. Bam acquired the site from the Revenue Commissioners in 2006 and was previously granted planning permission to develop a 183-bed hotel and a substantial office development on the site in 2009, although this never proceeded. Evening Echo, 4th December



Multi-Unit Residential Sales: New figures from Hooke & MacDonald show that investment sales from the multi-unit residential sector have accounted for 17% of total investment sales in Dublin in 2017, after only accounting for just 6% of investment sales in Dublin in 2016. The largest investment sale in Dublin this year, the Cosgrave Group’s sale of the 319-unit Charlotte apartment block in Dún Laoghaire to a German fund for €132m, was also from the multi-unit residential sector. Total investment in the multi-unit residential sector from 2016 to the end of Q3 2017 was €426m, and the expectation is that this figure will eclipse €500m by the end of 2017. The Irish Times, 29th November

North City Operations Depot: Dublin City Council is proceeding with a plan to consolidate 19 depots across north Dublin into one location at Ballymun. To fund the €25m project to relocate to the site, the council will dispose of the legacy depots which will no longer be used. At least some of these sites are expected to be of interest to developers, and the council’s portfolio includes a large site off Collins Avenue, which is directly across from Dublin City University. The new facility at Ballymun will be located on a site already owned by the council, and will include a c. 54,000 sq. ft. office property, an 18,427 sq. ft. warehouse and a number of workshops including a welding facility, a vehicles workshop and a salt barn which will store road salt. The Irish Independent, 30th November

UCC Student Accommodation: UCC has sought planning permission from An Bord Pleanála (ABP) for a 255-unit student accommodation development on the site of the former Crow’s Nest bar, which is located at Victoria Cross, on the outskirts of Cork City. The college was able to submit the application directly to ABP as it meets the criteria under the new strategic housing development (SHD) regulations, which specify that applications for student accommodation projects with 200 or more units can be made directly to ABP. UCC acquired the site in 2016, after a consortium decided to ‘flip’ the site on to the college, after purchasing it from Fleming Construction a short time beforehand. The proposed development will rise up to ten storeys in height if planning is granted. The Irish Examiner, 1st December

Walkinstown Apartments: Canmar Properties Ltd has sought planning permission from Dublin City Council to develop 58 residential units and three retail units at a site at the junction of Long Mile Road and Balfe Road in Walkinstown, west Dublin. The 58 units will consist of 14 one-bed apartments, 24 two-bed apartments, eight three-bed apartments and twelve three-bed townhouses. To facilitate the development, the existing buildings at the site will be demolished. Canmar is controlled by Chelsea Burghoorn and Darragh Corrigan. NAMA Wine Lake, 3rd December

Mortgage Legislation: A change to the Central Bank’s mortgage lending legislation for buyers of family homes will mean that banks are now only allowed to provide 10% of non-first time buyers with an exemption to the legislation. Previously, banks were entitled to give exemptions to 20% of their borrowers who were seeking a mortgage for a family home, however the change means that the 20% threshold will now only apply to first-time buyers. Under the current legislation, first-time buyers require a 10% deposit, whereas non-first-time buyers require a deposit of 20%. The loan-to-income limit for all buyers remains at 3.5x their gross income. The Irish Times, 29th November

Goodbody Homebuilding Figures: The latest figures from the stockbroker Goodbody show that the number of homes built in October 2017 was 110% above the October 2016 figure. Goodbody reports that 1,067 new properties were registered with the Building Energy Rating (BER) scheme in October 2017, bringing the YTD figure to 7,503. The number of completions based on BER data is well below the figures reported using electricity connections, which show that 13,533 units were completed in first nine months of 2017. The Irish Times, 30th November



Blanchardstown Corporate Park: Sales agent William Harvey & Co is seeking tenants for a detached refrigerated warehouse facility with ancillary offices in Blanchardstown Corporate Park, Dublin 15. A rent of €230k p.a. is being sought for the 25,004 sq. ft. facility. The Irish Times, 29th November



BidX1 December Auction: The December 13th / 14th BIDX1 online auction is expected to see 200 lots available for purchase, for which the cumulative sales prices are expected to be c. €50m. The auction will consist of both residential and commercial lots, with the residential lots being offered on the 13th and commercial lots available on the 14th. The properties under auction are located throughout Ireland, and the commercial lots include sites in Blarney, Co. Cork and Foxrock, south Dublin, for which the reserves are €3.095m and €2.9m respectively. The Blarney site previously had planning for 156 residential units while the Foxrock site has planning for 20 apartments. The most expensive residential asset for sale is a five-bedroom house named Ellington on Temple Road in Dublin 6, which has a reserve of €1.8m. The Irish Examiner, 30th November

Artane Nursing Home: Bartra Capital Property Group has acquired a c. 2.5-acre site in Artane, north Dublin, which has full planning permission for a 221-bedroom nursing home facility. The cost of the site and the cost of developing the nursing home have not been disclosed. The site is the third nursing home development site which Bartra has acquired this year, after the company acquired an 11-acre site in Loughshinny and a one-acre site in Santry. The Loughshinny site is expected to accommodate a 123-bedroom nursing home, while the Santry site will facilitate a 118-bedroom nursing home. The Irish Times, 30th November


If you have an article which you would like to have considered for inclusion in our next weekly report, please contact us at info@origincapital.ie

Origin Capital funds senior debt transactions in the CRE investment sector, typically in the €3m – €15m range. If you would like to discuss how Origin Capital can help with your funding requirements, please contact us on 01 662 9264.

Origin Capital is a wholly owned subsidiary of LeBruin, a leading provider of corporate finance and debt advisory solutions.