Irish Life portfolio for around €90m

HAMBLEDEN HOUSE, the headquarters of estate agents Bannon Commercial and Colliers Jackson-Stops, is among a portfolio of three office buildings that Irish Life intends to put up for sale in the coming weeks for around €90 million.

It's understood the state's largest property institution is seeking between €30 million and €35 million for the five-storey, mock Georgian building at 19-25 Pembroke Street Lower in Dublin 2.

The two remaining properties in the portfolio are Wilson House on Fenian Street in Dublin 2 and an office block above the Merrion shopping centre in Dublin 4.

While Irish Life's decision to brave the abysmal market conditions is thought to be a result of the recent upsurge in redemptions from retail investors at its unit-linked funds, many in the industry are hoping this portfolio disposal will become the catalyst for further institutional sales.

So far this year, property funds have remained on the sidelines as capital values went into reverse and the economy veered towards recession.

In the UK, however, a series of institutional fire sales have pushed yields out as far as 8 per cent in some areas. But industry observers claim such a dramatic turnabout is not a realistic scenario for the Irish market. According to one source, although the institutions are all keen to offload property and increase depleted cash reserves, "we will not see them selling at any price, as has been the case in the UK".

Other agents point out the virtual shutdown in bank funding and continued uncertainty over future values means Irish Life must adopt a flexible attitude to pricing if the sale is to attract the market's limited number of cash-rich investors.

Yet despite the tough climate, it's expected Hambleden House will generate a high level of interest among potential buyers given its prime location and 67 car-parking spaces, which are available in nearby surface car-parks.

The 3,729sq m (40,140sq ft) building was previously part of Scottish Provident's extensive Irish portfolio which was sold to Irish Life for over €140 million in 2005. Although there was no breakdown on individual prices, at the time the property was estimated to be worth at least €20 million.

Documentation from that deal shows the building's estimated rental value was €1.7 million which would indicate a yield of around 4.5 per cent based on the rumoured €35 million price tag.

However, some agents describe such a yield as too aggressive and predict that even yields on a prime property like Hambleden House have moved out to over 5 per cent.

One of the perceived drawbacks on the property is its multi-tenancy structure. Anglo Irish Bank is on a short-term lease on the lower ground flood and industry observers argue this might prompt tighter lending restrictions from the banks.

As agent CBRE has yet to release details on the portfolio to the market, little is known about Wilson House or the Merrion centre office block.

Although the locations are regarded as secondary by property agents, the higher yields are expected to generate interest among bargain hunting investors.