14th November (Issue 423)
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.
RETAIL
Shopping Centres, Blanchardstown and Tallaght AIB faces a haircut of up to 20% on the sale of loans advanced to two of Dublin’s largest shopping centres. According to the Sunday Times, the debt sale went to second-round bids, with four credible bids received in the first round. Offers were said to be at 80c on the euro. Blanchardstown shopping centre, which is controlled by Goldman Sachs, was put on the market for €700m, €50m less than Goldman paid for it in late 2020. The AIB loan on the centre has a face value of €175m and is part of a total syndicated senior debt package of €570m. AIB is the main senior lender to OCM Luxembourg Square Retail, a vehicle owned by Oaktree Capital Management which owns the Tallaght mall. It owed the bank €191m at the end of 2021. The Tallaght shopping centre is being sold for approx. €160m. The Sunday Times, 12th November
Retail Sector The latest research from MSCI and SCSI, the indexes for Irish commercial property investment, reveal that retail rents continued to increase in the third quarter of the year at rates of between 2% for shopping centres and 1.2% for those in Grafton Street. Consequently, over the 12 months to September, rents have increased across the sector by strong single digits ranging from 5% in Grafton Street to 7.1% in retail warehouse and 7.4% in shopping centres. Despite rental recovery the capital values of such properties continued to fall and this is attracting private Irish investors. According to MSCI, shopping centres and retail warehouses saw their values drop 1.2% and 2.1% respectively in the quarter while Grafton and Henry/Mary Street values fell 5.8% and 8.2% respectively. The Business Post, 11th November
OFFICE
Earlsfort Terrace, Dublin 2 Having already agreed a deal earlier this year to sublet just under 50,000 sq. ft of the office space at its new headquarters on Dublin’s Earlsfort Terrace to KKR, Intercom has decided to delay its own move into the property. The high costs associated with fitting out the Cadenza building are understood to have informed the company’s decision to seek out alternative, fully fitted accommodation at numbers 124-127 St Stephen’s Green instead. According to market sources, Intercom intends to rent approx. 40,000 sq. ft at the St Stephen’s Green building from its main tenant, Indeed, on a short to medium-term basis. The space being taken by Intercom became available in 2021 following Indeed’s move to consolidate its own Dublin-based operations into its other office at Capital Dock in the city’s south docklands. Intercom agreed to pre-let the entire Cadenza building (110,868 sq. ft) on an 18-year lease prior to the arrival of Covid-19 in December 2019. KKR occupies the top three floors of the property following the agreement of a deal that saw Intercom assigning part of its lease with the building’s owner, Irish Life, to the global investment firm. The Irish Times, 8th November
Adelaide Road, Dublin 2 Joint letting agents BNP Paribas Real Estate and CBRE have managed to secure occupiers for the entire of 57 Adelaide Road on a floor-by-floor basis. The recently refurbished grade-A building, which extends to 15,663 sq. ft is now home to BNP Paribas Real Estate Ireland, Murgitroyd, Acacium Group and VMO Aircraft Leasing. BNP Paribas Real Estate Ireland were the first tenant to move into the property and agreed to lease the entire ground floor extending to 4,854 sq. ft, while European patent and trademark lawyers, Murgitroyd took a lease on the second floor extending to 3,730 sq. ft on a 10-year term. Acacium Group, which specialises in recruitment, agreed to lease the penthouse floor extending to 2,549 sq. ft on a 10-year term while the final letting to VMO Aircraft leasing was for the first-floor suite extending to 4,530 sq. ft on a 10-year term. Rental levels across all four lettings are understood to have been approx. €50 per sq. ft and €3.5k per car space pa. BNP Paribas Real Estate and CBRE are also seeking tenants for the adjoining Corrib House, an end-of-terrace self-contained Georgian office building fronting onto Lower Leeson Street. The subject property extends to a net internal area of 4,270 sq. ft and is available for immediate occupation. The quoting rent has been set at €32.50 per sq. ft. The Irish Times, 8th November
Chancery Lane, Dublin 8 Sretaw PE is understood to be closing in on the acquisition of the Chancery building in Dublin City Centre for approx. €19m. Should a deal proceed at that level, it would equate to a discount of 23% on the €24.75m price that had been guided by Knight Frank. The proposed price is approx. 20% lower than the €23.8m Credit Suisse paid Hibernia Reit to secure ownership of the property in 2017. The Chancery building, built in 2005, comprises a six-storey over-basement office and residential development on Chancery Lane in Dublin 8. The office element of the scheme extends to 34,283 sq. ft with secure basement car parking for 19 cars. There are also four two-bedroom units that extend to 818 sq. ft each. The offices are fully let to three tenants and are producing total rental income of €1.4m pa, 69% is being generated by State tenants. The ground floor is let to Wella Studio. The first to fourth floors are let to the OPW. The penthouse floor is occupied by Analytic Partners. The four apartments are fully let to private residential tenants. The rent roll of the residential units equates to €99k pa. The Chancery building comes with planning permission to extend the floor area of the office accommodation by 9,838 sq. ft. The Irish Times, 8th November
HOSPITALITY
Tifco Hotel Group Apollo Global Management is working on the sale of its €500m+ Irish hotel platform. Eastdil Secured has been mandated to explore various disposal options for the Tifco Hotel Group business, Ireland’s second-largest hotel chain. Tifco operates 25 hotel properties across Ireland, with approx. 3,000 rooms in total, although the number of assets it owns is understood to be 16. The portfolio includes 11 Travelodge hotels across Ireland and Northern Ireland, with the majority in Dublin. The five Dublin assets include Townsend Street in the city centre; Rathmines; Dublin Airport South; Dublin Airport North Swords; and Phoenix Park. Apollo acquired the hotels when it bought the Tifco hotel business from Goldman Sachs in 2018. The US group is understood to have paid approx. €320m for the standing hotel assets and committed a further €80m to €100m to fund the development schemes. React News, 9th November
Morrison’s Quay, Cork Cork City’s newest hotel, the €45m Premier Inn, is set to be handed over to its operators, the Whitbread Group, in less than two weeks time. The group is hoping to open the 187-bed Morrison’s Island hotel by the end of January next year. The development includes ground floor offices in one section of the hotel, as well as refurbished offices in Nos. 11,12 and 13 Morrison’s Quay. The Irish Examiner, 9th November
Killarney, Co. Kerry The Aghadoe Heights Hotel in Killarney has been granted permission by Kerry County Council for the provision of a new four-storey extension to its rear. Comprising approx. 22,173 sq. ft, it will allow for the provision of 30 additional hotel bedrooms and ancillary spa storage and plant space. The development at the five-star hotel will increase its total number of bedrooms from 74 to 104. Under the development, the overall hotel size will increase from 87,133 sq. ft to 110,276 sq. ft. The Irish Examiner, 8th November
Griffin Group Hotels, which operates the Monart Destination Spa and the Ferrycarrig Hotel in Co Wexford, as well as the nearby Hotel Kilkenny, saw its profits drop by more than a third last year. The business said it was “significantly impacted” by the rise in interest rates, as well as in the cost of food and energy. It reported a profit of €1.8m for the year, which was down from €2.9m in 2021 and €2.2m in pre-pandemic 2019. On the brighter side, turnover recovered to €25m as public health restrictions were lifted. Turnover in 2021 amounted to €12.8m, while the group generated a turnover of €25.2m in 2019. The group continued to invest in its properties with €2.1m capital spent throughout 2022. It invested in the significant refurbishment of all bedrooms at Monart Destination Spa, a major renovation of Hotel Kilkenny’s Rosehill 1831 bar and continued refurbishment of the Ferrycarrig Hotel bedrooms and public areas. The group’s director of sustainability said it would invest a further €1.2m in sustainability measures in 2024. The Irish Times, 14th November
MIXED-USE
INDUSTRIAL / LOGISTICS
RESIDENTIAL / DEVELOPMENT
North Quays, Dublin City Centre Ronan Group Real Estate (RGRE) will be allowed to build Dublin’s tallest building — 25 storeys — at the Waterfront South Central site on the North Quays, bringing an end to a years-long battle with authorities over height restrictions. RGRE confirmed that the site would be for a “signature apartment block” with 25 floors, up from the ten-storey cap in the North Lotts and Grand Canal Dock planning scheme. The decision to more than double the height of buildings allowed in the area was made by Dublin City Council and An Bord Pleanála. The approval marks a concession for both sides given they applied in 2019 for a 44-storey block with 1,005 apartments across the site. A second residential block at the rear of the Waterfront site can now consist of 12 floors, up from the previous seven storeys. The project will be built by Libra Living, RGRE’s residential brand and the developer behind the nearby Spencer Place apartments. The Sunday Times, 12th November
South Circular Road, Dublin 8 A three-year legal battle against the construction of two build-to-rent and co-living schemes on the sites of the former Bailey Gibson and Player Wills factories in Dublin 8 has been brought to an end, paving the way for apartment blocks up to 19 storeys tall. US property group Hines bought the former Player Wills cigarette factory and Bailey Gibson packaging plant sites on the South Circular Road, which had been in the control of Nama, in 2018. Hines was granted permission in 2020 by An Bord Pleanála for 416 homes with a 16-storey apartment block on the Bailey Gibson site. In 2022, the board granted the developer permission for the construction of 732 apartments across four blocks with one building rising to a height of 19 storeys on the Player Wills lands. In 2021, the High Court referred aspects of the Bailey Gibson case to the European Court of Justice. Earlier this year the case was determined in Hines’ favour but this was then appealed to the Supreme Court. It is understood that talks with the residents’ association have been ongoing for some months in an attempt to reach an agreement which would allow construction to begin on site. It is expected Hines will now work with the Land Development Agency. The Irish Times, 8th November
Residential Zoned Land Tax (RZLT) The owner of Independent House, the former headquarters of Independent Newspapers on Abbey Street in Dublin, has failed in its bid to have the 1920s protected structure excluded from the new land-hoarding tax. Retailer Primark bought the old newspaper building 10 years ago, and was expected to expand the clothing and homewares shop. However, the building remains vacant, its windows covered by metal panels. In its submission the retailer said it should not have to pay the new RZLT because the building was not suitable for conversion to residential use. Separately the board has upheld the decision by Dún Laoghaire-Rathdown County Council to include two sites owned by the Carmelite order of nuns in South Dublin on the register. The order had appealed the inclusion of the Carmelite Monastery of the Immaculate Conception, Roebuck Road, Clonskeagh, close to UCD, and St Joseph’s Monastery on Kilmacud Road Upper, Blackrock, on the RZLT maps. The Irish Times, 13th November
Dublin Port A plan to provide berths for houseboats on the river Liffey and develop a residential marina at Pigeon House Harbour, has been presented to Minister of State at the Department of Housing. The plan would see the reopening of the existing Pigeon House Harbour beside the decommissioned power station on the Poolbeg peninsula, to provide a marina for long-stay and visiting boats. Proposed by the Dublin branch of the Inland Waterways Association of Ireland (IWAI), the plan also repeats a 2018 Dublin City Council recommendation for berths for residential, commercial and leisure use, at various locations along the river between Matt Talbot Bridge and the 3Arena. The Irish Times, 13th November
Schoolhouse Lane, Dublin 2 CBRE is guiding €4.5m for a block of 12 self-catering apartments and penthouses in Dublin’s Central Business District. Known as Molesworth Court Suites, they are located on Schoolhouse Lane, which connects Kildare Street to Molesworth and Dawson streets. Ranging in size from 441 to 1,377 sq. ft, the units include two split-level penthouses and the building comprises four floors over a reception entrance hall. Seven car-parking spaces are located at ground floor. CBRE declined to comment to the Irish Independent on the annual income from the short-stay units but the Molesworth Suites website recently quoted rates starting at €230 per night. The Irish Independent, 9th November
Housing Agency Acquisitions (HAA) Fund Just over 900 properties had been acquired by the Government’s HAA fund as of May this year, against a 2021 target of 1,600, according to Department of Housing. The €70m fund was established in 2017 with the aim of acquiring vacant property portfolios from banks and financial institutions that could then be used for social housing. The target for the HAA fund was to acquire 1,600 units over a four-year period to 2020. However, this target was subsequently extended out to 2021. According to data provided by Minister for Housing Darragh O’Brien, 904 properties had been acquired under the HAA fund as of May of this year. Mr. O’Brien said a further 52 properties were delivered under the HAA fund programme but bought directly by local authorities using capital funding through the Social Housing Capital Investment Programme. The Minister also noted that the Housing Agency also completed the acquisition of 606 properties while acting on behalf of local authorities. Mr. O’Brien said his department had conducted a review of the HAA in 2022, which identified a number of challenges faced by the fund, “the most significant of which is the reduced availability of suitable units from banks and equity funds.” The Irish Times, 9th November
Vacant Houses Dublin Council homes will be left derelict or boarded up in Dublin city next year unless the Department of Housing reverses funding cuts for refurbishment, a senior Dublin City Council official has said. The council’s 2024 budget, which will be presented to councillors next week, includes €10m for “voids” – houses or flats which have been vacated by tenants but are not in a fit condition to be relet, a drop of €15m on 2023’s funding. The council had restored 843 homes this year, an increase of 22% on 2022 and 642 units “became void” to date in 2023. There are approx. 500 council homes in Dublin city waiting to be refurbished, a figure which fluctuates as homes are vacated or refurbishment work completed. “Voids in 2023 are costing us on average about €45,000. Before 2023 it was an average cost of €32,000 and this is to do with materials and labour costs,” the official said. The Irish Times, 9th November
Killarney, Co. Kerry A prime piece of land near Killarney town centre with a guide price of €2.5m and residential zoning is attracting “very strong interest” according to the auctioneer. The 4.5-acre site had the potential for 15 homes per acre, but potentially more if a developer was allowed to build upwards. It is within walking distance of Killarney town centre and national park and has handy access to the Tralee Road/Cork Road and the Ring of Kerry Road. The Irish Examiner, 9th November
Killarney, Co. Kerry Planning permission has been granted for a major housing development in Killarney. KPH Construction has been granted permission by Kerry County Council for the construction of 249 new homes in Upper Park Road, Killarney. The development includes a range of house type, including 117 three-bed houses, six four-bed houses, and two five-bed houses. There are approx. 68 two-bed apartments, 38 one- bed apartments, and 18 two-bed houses. All are two-storeys. The developer has also included provision for a two-storey creche of approx. 4,488 sq. ft in gross floor space, approx. 529 car parking spaces, as well as 352 bicycle spaces. The Irish Examiner, 8th November
OTHER
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