Irish Life sells €52m office portfolio

Last-minute competition for the portfolio will be welcomed by the investment sector where turnover has dropped to less than €50 million in Q1 2010, writes JACK FAGAN

IRISH LIFE has completed the sale of a €52 million office portfolio in Dublin, according to an official spokesman for the company. The sale was prompted by an upsurge in redemptions from retail investors at its unit-linked funds.

The purchaser, thought to be an overseas fund, swooped on the portfolio only days before a US investment bank was due to complete contracts to purchase the buildings for €50 million.

With the four office blocks producing a rent roll of €4.2 million, the investment will show an initial return of 8.3 per cent.

The last-minute competition for the portfolio has been welcomed by the investment sector which has watched overall turnover in the market drop to less than €50 million in the first three months of the year.

Funds and individuals contemplating the sale of further investments will be hoping that the Irish Life sale could trigger further overseas interest now that Irish capital values have been seriously reduced.

Colm Luddy of CB Richard Ellis originally sought a buyer in May, 2008, for Hambleden House, a mock Georgian office block at Lower Pembroke Street, along with Wilson House on Fenian Street in Dublin 2 and an office block above the Merrion shopping centre in Dublin 4.

The announcement of the sale coincided with a dramatic fall in investment values and also with a tightening in bank credit. However, Irish Life decided to press ahead with the sale because of the continuing redemptions and cut its asking price for the three blocks from €81 million to €40.8 million.

Davy, which was advising the US bank, expressed an interest in acquiring Hambleden House but, instead of the two other blocks in the portfolio, identified three different investments it was interested in – Seagrave House on Earlsfort Terrace, Davitt House on Adelaide Road and the former CompuStore at 25 St Stephen’s Green.

Irish Life duly agreed to proceed with the alternative portfolio sale and undertook to underwrite the rent of vacant space for five years to maximise the value of the investments.

The five-storey Hambleden House has 3,729sq m (40,140sq ft) and 67 surface car-parking spaces on the opposite side of the road. The lower ground floor has been vacant since a short lease held by Anglo Irish Bank ran out. The building has the potential to show a rental return of €1.7 million.

The 1,625sq m (17,500sq ft) Seagrave House is partially vacant but, when fully let, the building would probably have a rent roll of around €850,000 per anum.

Davitt House, a 4,087sq m (44,000sq ft) building, is rented by the Office of Public Works at €1.7 million. The lease has another five years to run.

The building beside Lisney on St Stephen’s Green, apart from the long vacant CompuStore, includes 1,393sq m (15,000sq ft) of offices and three apartments. It is producing a rent of €600,000 per annum.