5th September (Issue 112)
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.
MARKET COMMENTARY
CBRE Bi-Monthly Report: CBRE’s latest research report on the Irish commercial property market notes that H2 2017 is likely to see increased transactional activity for most sectors when compared to H1 2017. Despite the supply imbalance in the industrial sector, CBRE note that transactional activity persisted throughout the usually quiet summer months, with c. 1.29m sq. ft. of take-up in H1 2017. Also now that prime industrial rents have surpassed levels which justify new builds, CBRE note that there has been an increase in the number of planning applications for new developments in Dublin. In the retail sector, CBRE expect to see an increase in prime rents in the coming months as new transactional evidence becomes available. In the investment market, although prime yields are currently stable across all sectors, CBRE expect yields in some sectors to tighten as investors vie for Dublin investment opportunities, where yields are more attractive when compared to those of other European capitals. CBRE Ireland Bi-Monthly Research Report, September 2017
RETAIL
The Square Tallaght: Joint agents Cushman & Wakefield and JLL are inviting offers in excess of €233m for a controlling interest in The Square Tallaght, a 27-year old shopping centre in south Dublin which had c. 22 million visitors in 2016. The rental income from the shopping centre is c. €14m p.a., offering the new owners a return of c. 5.8%. The shopping centre is being sold under the instructions of NAMA. The sale includes 118 of the 160 units in the shopping centre, as well as the 13-screen cinema and more than 2,400 car spaces. The overall centre extends to 577,000 sq. ft. on a site of c. 27 acres, however some its units were sold to institutions, traders and tax investors when the centre first opened. Anchor tenant Dunnes Stores owns the majority of its 100,000 sq. ft. store, while Tesco also owns its 60,000 sq. ft. outlet. The top ten tenants in the centre account for more than €5.7m of the rental income, while the overall weighted average unexpired lease term for the centre stands at more than seven years. The Irish Times, 30th August
The Capitol Building: German property company Real IS has acquired the Capitol building in Cork city centre from the JCD Group for c. €45.6m. Real IS has acquired the property on behalf of a German pension fund. The Capitol is one of the largest retail and office developments in Cork city centre, and the JCD Group had secured tenants for c. 80% of the building under long-term leases prior to the sale. The tenants include TJX Ireland t/a HomeSense, Life Style Sports and the Facebook subsidiary Oculus. The JCD Group acquired the site for the Capitol in 2015 for c. €6m. The Sunday Times, 3rd September
Dundrum Refinance: As part of a refinancing deal by its joint owners Hammerson and Allianz, Dundrum Town Centre has been valued at more than €1.5bn, less than two years after it was acquired as part of the c. €2.57bn par value Project Jewel loan portfolio, which sold for c. €1.849bn. In addition to Dundrum Town Centre, Hammerson and Allianz also acquired a six-acre development site in Dundrum, a 50% stake in the Ilac Centre, a 5.4-acre site between Moore Street and Upper O’Connell Street and a 50% stake in the Pavilions shopping centre in the Project Jewel portfolio. The rental income from Dundrum Town Centre is estimated at c. €60m p.a. NAMA Wine Lake, 3rd September
Dawson Street: A mixed-use period building at the intersection of Dawson Street and St Stephen’s Green in Dublin 2 has been put on the market by SW3 Capital through Savills, with a guide price of €6m. The five-storey, over-basement period building contains three street-level shops and four large apartments on the upper floors. The retail units, which share an overall floor area of 2,310 sq. ft., are let to Tang, Sunglasses.ie and Amuse at a combined rent of €155k p.a. The four apartments on the upper floors are targeted at the corporate sector and produce rental income of €168k p.a. Each apartment is let to a single occupier on recently agreed five-year leases, requiring minimum management intervention. Based on the guide price, the investment will offer a return of c. 5.2%. The Irish Times, 30th August
SuperValu Balally: The SuperValu store in the Balally Shopping Centre in Sandyford, Dublin 16, has gone on sale with a guide price of €3.75m through agents JLL. The supermarket extends to 11,443 sq. ft. and is let under three different leases to the Musgrave Group, with an average term of c. 8.5 years remaining on the leases. The rental income from the leases, which are subject to upwards-only rent reviews, is c. €263k p.a. Based on the guide price, the investment offers a return of c. 6.7%. The Irish Times, 30th August
22 Upper Baggot Street: Colliers International is guiding €2.15m for 22 Upper Baggot Street, a four-storey Victorian building in Dublin city centre. The building extends to 3,580 sq. ft. and has rental income of c. €111k p.a., offering the new owner a return of c. 4.9%. The ground floor restaurant is let to Saba, a Thai and Vietnamese-style restaurant, at a rent of €85k p.a. on a 15-year lease from 2015, with five yearly open-market rent reviews and a break option in year ten. The upper floors are let to the Elmwood Centre on a four year, nine month lease from March 2015 at a rent of €26k p.a. This lease includes two car parking spaces to the rear of the building. The Irish Times, 30th August
OFFICE
City Block 9: A NAMA-appointed receiver has sought planning permission for a large scale commercial and residential development on a site known as City Block 9 on the North Wall Quay in Dublin’s docklands. The application seeks permission for nearly 388,000 sq. ft. of space across four office blocks and two apartment blocks. The application proposes that the first apartment block will contain 189 apartments, a crèche and a café, while the second block will contain 231 apartments and three retail units. The Sunday Times, 3rd September
East Gate Innovation Campus: The Sunday Times reports that McDonogh Capital Investments expects to lodge a planning application in the next year for a 350,000 sq. ft., €80m innovation campus located 2.5km east of Galway city centre. The complex has a working title of ‘East Gate Innovation Campus’ and the proposed development will be located on a c. 9.6-acre site at Bóthar Na Mine in Ballybane. It is intended that a number of office blocks between 30,000 sq. ft. and 50,000 sq. ft. will be developed in the new complex on a phased basis, and the new development will also include a public plaza that will incorporate restaurants and other service offerings. The Sunday Times, 3rd September
Google Dublin: The Irish Independent provides an update on Google’s activity in the Dublin office market. The paper understands that Google has agreed a lease with Irish Life for all four floors of the Blackthorn Building in Sandyford, south Dublin. The paper also reports that Google is exploring the possibility of taking space in two additional buildings in Sandyford, in the Chase Building (owned by Irish Life) and the Atrium. Finally the paper reports that Google remains in “informal discussions” with the owners of the Treasury Building in the south Dublin docklands over a potential purchase. The Irish Independent, 31st August
1 Windmill Lane: Hibernia REIT has announced that it has agreed terms with Core Media for 24,000 sq. ft. of its 1 Windmill Lane development in the south Dublin docklands which is in the final stages of development. Core Media has agreed to a 21-year lease, for which 12 years are certain, at a rent of €57.60 psf. Core Media will receive six months’ rent free, and they will make annual contributions towards the reception, town-hall and car park areas. Once complete, the building will contain 124,000 sq. ft. of office space, 8,000 sq. ft. of retail space and 14 residential units. The Irish Times, 4th September
Block D Charlemont Exchange: Knight Frank is guiding €12.5m for Block D at Charlemont Exchange, a vacant office block on Charlemont Street in Dublin 2. The semi-detached office block, which extends to 22,034 sq. ft., forms part of a larger mixed-use complex that includes the Hilton Hotel and was completed in the late 1990s. The hotel was bought by John Malone for c. €30m in 2014. The Irish Times, 29th August
36 Fitzwilliam Place: Bids of €3.25m are being sought by Colliers International for a Georgian house at 36 Fitzwilliam Place in Dublin 2. The sale includes a mews to the rear at 36 Leeson Close. The property has been owned by an Irish-American family for the past 25 years. The basement, ground and first floor are fitted out as high-end offices, while the two upper floors have been used as a two-bedroom apartment. The Irish Times, 29th August
HOTEL
The Gibson Hotel: The four-star Gibson hotel in Dublin’s docklands has been brought to the market by Savills, on the instruction of receivers Grant Thornton, with a guide price in excess of €87m. The 252-bedroom property opened in 2010, and is considered to be a landmark investment opportunity due to its location in the Dublin docklands area. The hotel is fully let to Galsay, a subsidiary of Dalata, under a 25-year lease running from 2010. The lease offers an unexpired term of 17.8 years, and the current rent of €4.65m p.a. is subject to upward-only rent reviews. Based on the guide price, the hotel offers a net initial yield of c. 5.1%. The Irish Independent, 30th August
The Plaza Complex: CBRE are guiding €14m for the mixed-use Plaza complex in Tallaght, which is being sold on the instructions of receiver Declan Taite of Duff & Phelps. The six-storey, over double-basement development extends to 201,000 sq. ft. on a site of 2.8 acres, and includes a four-star, 122-bedroom hotel and basement nightclub, three floors of offices totalling c. 74,000 sq. ft., three ground-floor retail units and 480 car parking spaces. The OPW occupy all but c. 23,000 sq. ft. of the office space under leases which have c. 7.6 years remaining, with no break options. The remaining office space is vacant. Based on the current rental income from the complex of c. €1.3m p.a., the investment offers a net initial yield of c. 8.9%. There is potential to substantially increase the yield once the vacant office space is let. The Irish Times, 30th August
Dublin Hotel Rates: The annual Crowe Horwath hotel industry survey has shown that room rates at Dublin hotels have reached an all-time high, rising at almost double the rate of the rest of Ireland over the past year. The average room rate (ARR) increased by almost 15% in 2016, due to a lack of supply and a huge increase in the number of visitors from the US. The ARR in Dublin is now €128 per night, up from €112 last year, and above the previous record of €121 achieved in 2006. Nationally, including Dublin, the ARR is €104. In the midlands, it is €91 (up 8.6%), while prices rose 10% in the southwest to €93. The average occupancy rate of 82% in Dublin means that the city’s hotels are full c. 300 nights each year, while the average occupancy rate in the rest of the country is 69%. The Irish Times, 30th August
RESIDENTIAL / LAND
Danske Bank Mortgage Book: The Sunday Times reports that the Central Bank is expected to veto any attempt by Danske Bank to sell its remaining mortgage portfolio to unregulated vulture funds. All of the loans in the c. €1.8bn mortgage portfolio are low-risk and performing, and the portfolio has attracted significant interest from traditional lenders such as Bank of Ireland. The majority of the mortgages are tracker mortgages, where interest margins are as tight as 0.5%. Previous loan sales by Danske Bank did not draw the interest of traditional lenders as many of the mortgages were in arrears. The sale is being handled by Bank of America Merrill Lynch, and is expected to be finalised in the next month. The Sunday Times, 3rd September
Bridgedale Developments: Bridgedale, a Dublin developer backed by Oaktree Capital Management, has taken options to acquire development sites worth almost €100m, with the options contingent on the company floating on the Dublin stock market. The company has reportedly contracted to buy €80m of development land from Cerberus, much of which is located in Co. Wicklow. Bridgedale has also agreed to purchase land (which is currently under the control of Goldman Sachs) at Citywest in Co. Dublin, in an additional deal worth €16m. The flotation may take place as early as October. The Sunday Times, 3rd September
Donnybrook Residential Site: A residential site of more than three acres in Donnybrook near UCD has been sold by Purleigh, a firm controlled by Denis O’Brien, to Cairn Homes for an undisclosed amount. The site has been earmarked for a €60m-plus development of 90 luxury apartments. Purleigh obtained planning approval to build 71 apartments on the site in Donnybrook in December 2016, and plans to increase this number to 90 units will be decided this week by An Bord Pleanála. The Irish Independent, 4th September
South Dublin Residential Development: Developers Paddy McKillen and Paddy McKillen Jr are believed to have paid c. €30m (c. €5m over guide) for a ten-acre site in Blackrock, south Dublin. The McKillens are now expected to seek planning permission for c. 300 homes on the site, which was sold by the Sisters of Charity. NAMA Wine Lake, 3rd September
Malahide Residential Sites: Cushman & Wakefield are guiding €12m for two residential sites on Seamount Road in Malahide, Co. Dublin. The first site, which extends to c. 6.3-acres, already has planning permission for 46 detached houses (11 three-beds and 35 four-beds). The second site, which extends to c. two-acres, will initially provide construction access for the first site, however the total number of houses developed on the sites could later be increased to 60. According to Cushman & Wakefield, the houses should be valued between €750k and €1m. The Irish Times, 29th August
Smithfield Lofts: Savills are guiding €9.25m for 44 apartments, six townhouses, and 33 car parking spaces in the Smithfield Lofts complex on North King Street in Dublin city centre. The gross rental income of the investment, which is 98% occupied at present, is c. €639k p.a., offering a gross income yield of c. 6.6%. Based on the guide price, the average break-up value per apartment is c. €185k. The residential units consist of 16 one-bedroom apartments, 28 two-bedroom apartments and six two-bedroom townhouses. The remaining 13 apartments and the commercial units in the Smithfield Lofts complex are already in private ownership. The Irish Independent, 31st August
Multi-Family Sector (MFS): A report by Cushman & Wakefield and Sherry Fitzgerald assesses how transaction activity in the MFS has increased in recent years. In 2013, there were just 16 MFS transactions in the Republic of Ireland, for a cumulative amount of just under €250m. In 2016, there were 74 transactions, for a cumulative amount in excess of €424m. The report also examines how private investors are exiting the investment property market. Between 2012 and 2016, private investors represented the seller in approximately 33% of all investment property transactions p.a. In contrast, private investors represented the buyer in just 15% of property purchases p.a. between the same period. Cushman & Wakefield and Sherry FitzGerald Irish Private Rented Sector, 2017
Clonskeagh Apartments: An application by Gannon Properties to add 20 apartments to a 96-unit scheme on the site of the old Clonskeagh Paper Mills site in Clonskeagh, south Dublin city has been registered with Dublin City Council. Should the additional apartments be developed, the size of the blocks will increase from three storeys to four. NAMA Wine Lake, 3rd September
Fairview Development: Percy Boyle has sought planning permission from Dublin City Council to develop a three-to-four storey residential block which will contain 13 “family studios”, as well as communal facilities on Enaville Avenue in Fairview, north east of Dublin city centre. NAMA Wine Lake, 3rd September
July Mortgage Approvals: The July 2017 report by the Banking & Payments Federation Ireland (BPFI) on mortgage approvals shows that there were 3,970 mortgages approved in July 2017, which had a total value of c. €853m. While these figures represent an increase of c. 23.3% YoY (compared with c. €692m July 2016) based on the value of mortgages approved, they reflect a decrease of 8.0% when compared to June 2017 (c. €928m). Based on the value of mortgages approved, the first-time buyer segment grew by 30.4% YoY (c. €424m July 2017 vs c. €325m July 2016). BPFI Mortgage Approvals July 2017
OTHER
Allsop Ireland: The Irish entity involved in the Allsop Ireland property auction business has bought out the UK entity involved in the partnership in a deal believed to be valued at c. €4m. Allsop Ireland was set up in 2011 as a partnership between Irish company Space Property Group (SPG) and UK real estate agent Allsop. SPG has now acquired Allsop’s interest in the joint venture and renamed the company BidX1, as it plans to focus on online sales both here and in the UK. In the past six years, Allsop Ireland has sold c. €1.1bn of property at auction, through the disposal of just under 6,000 units. SPG is led by Steve McCarthy. The Irish Times, 30th August
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