€58m paid for city centre investments

Four office blocks and shop sold by airline pension fund

Acquisition: 10/11 Molesworth Street

Acquisition: 10/11 Molesworth Street

Wed, Mar 20, 2013, 06:00


Another Dublin commercial property portfolio is to remain in Irish ownership following a decision by the Irish Property Unit Trust (IPUT) to acquire five city centre investments for €58 million.

The four office buildings and a Tesco store, sold by the Irish Airlines Pension Fund, has a rent roll of €6.5 million and will give IPUT an income return of around 11 per cent.

In a separate development, the High Court has ruled that the trustees of the same pension fund must be given prior notice of a planned distribution of €500 million from the airline’s capital reserves in view of a €930 million shortfall in the workers’ pension funds. The move means it will then be open to the trustees to bring a claim against the airline.


Boost value
The four office buildings which have changed hands all date from the 1970s and have an overall floor area of 24,154sq m (260,000 sq ft) , giving them a sale value of around €2,475 per sq m (€230 per sq ft).

This is a long way short of the recent selling prices of €5,382/€6,458 per sq m (€500 to €600 per sq ft) paid for the State Street Bank building and the headquarters of lawyers E&L Goodbody on opposite sides of the Dublin docklands.

Incidentally, IPUT bought Goodbody’s IFSC HQ for €57million after selling its 50 per cent stake in a secondary office block in the city.

The off-market acquisition of the five commercial investments will boost the value of IPUT’s property portfolio to over €500 million. More than 60 per cent of the fund’s weighting is in the core Dublin office market, which is on track to provide rental growth in the next few years because of the absence of speculative office developments since the property market went into decline.

However, IPUT will have to upgrade some or all of the four newly-acquired office blocks to maximise rents in such prime locations.

Last year, IPUT had an overall return of just under 7 per cent on its property portfolio – the highest in the Irish market measured by London researcher IPD.


Landmark redbrick
One of the most interesting assets bought from the Aer Lingus fund, 10/11 Molesworth Street, is occupied by commercial property agents Jones Lang LaSalle and the Passport Office. Part of the 7,432sq m (80,000sq ft) block is currently vacant but it is still producing €1.9 million in rents.

A landmark redbrick building at 17/18 Dawson Street is yielding a rent of €1.2 million from the EU Commission, European Parliament offices and the Irish Insurance Federation. The block has a floor area of 3,251sq m (35,000sq ft).

The highest rent of about €2 million comes from two adjoining blocks extending to 7,432sq m (80,000sq ft) at 2/3 Harcourt Street. Leading professional services firm Mazars occupies most of number 3, while the other building has the Office of Public Works and Eircom among its tenants.

The fourth office block at 47/49 St Stephen’s Green is of strategic importance to IPUT as it adjoins its headquarters which were recently modernised. The main tenants are CPL Recruitment and life insurance company Caledonian Life, which has had an office in Dublin for the past 180 years. Two floors are currently vacant in the building which is producing rents of €700,000 per annum.

The only retail asset in the portfolio relates to a Tesco supermarket in Baggot Street where the lease has another 20 years to run. The UK multiple is currently paying €650,000 for the ground floor supermarket and the overhead offices.