Ranelagh scheme to make over €26m

Capel Developments is selling one of its top assets – a large residential and office scheme producing a rent roll of over €2 million annually

A SUBSTANTIAL residential development and a refurbished office building at Sandford Close in Ranelagh, Dublin 6, is to be offered for sale as a single investment in the new year. All 114 apartments and four coach houses in Sandford Lodge are currently rented and, along with a two-storey office block, are producing a rent roll of over €2 million per annum.

Ivan Gain and Michelle Jackson of Sherry FitzGerald are handling the sale for Capel Developments which, like many other development companies, has run into financial difficulties after purchasing a number of sites at inflated values before the property market collapsed.

Two of the company’s developments, a partially built apartment scheme in Churchtown and a site at Rathbourne in Ashtown, are in receivership. Although a guide price is not to be announced until the new selling season in January, the expectation is that the development will be priced over €26 million, giving investors a gross return before costs of 7.7 per cent.

The sale comes two weeks after receivers appointed by Ulster Bank sought €43 million for all 210 apartments in the Alliance Building at the Gasworks development in Ringsend, Dublin 4. This valuation equates to an income yield of 7.25 per cent. The investment has attracted interest from as far away as the US because most of the apartments are rented by Google employees. Ivan Gain says Sandford Lodge is also likely to attract overseas as well as local interest because of the superb fit-out in all the homes, their successful rental profile and proximity to a range of bars, restaurants and other traders in Ranelagh – “a suburb that can be described as Dublin’s Notting Hill”.

The easy access to the Luas at Beechwood has meant that homes in Sandford Lodge have been easy to let. In fact, the demand for high-end rental properties in the south inner suburbs has strengthened in recent months as young couples hold off buying while values are still falling or are unable to arrange mortgages due to the banking crisis. Whoever buys Sandford Lodge will have the option of breaking it up and selling it off in individual units when the market recovers. Recently, two two-bedroom apartments in the high density Mount St Annes scheme – a little further out from the city at Milltown – sold at €290,000 and €300,000.

Capel built 114 apartments in three separate blocks as well as four two-bedroom coach houses and a one-bedroom mews unit. There are 59 one-bedroom apartments with floor areas of 42 to 59sq m (452 to 635sq ft); 51 two-bedroom apartments of 65 to 100sq m (700 to 1,076sq ft), and four three-bed units of 85 to 95sq m (915 to 1,023sq ft).

Capel has had a reputation for high quality work and for using the very best materials. This is evident at Sandford Lodge where the high-spec finishes include impressive marble entrance lobbies; under floor heating; solid oak hardwood floors, doors and skirting boards; integrated electrical appliances; granite kitchen worktops; heated towel rails and power showers. A management suite is also provided for an on-site concierge.

The development also includes a basement car park with 130 spaces with additional parking at surface level. One-bedroom apartments generally rent from €1,100 to €1,250 per month; two-bedroom units make between €1,350 and €1,495; while coach houses attract rents of €2,100. Most of the homes are let on 12-month leases while others are on rolling leases. The two-storey office building has a net internal area of 372sq m (4,004sq ft) and is let to the National Adult Literacy Agency for nine years and 11 months from September, 2007 at a rent of €125,000 per annum. The next five yearly upwards-only rent review is due in September 2012.

The site of Sandford Lodge was previously owned by the National College of Ireland which is now based in Dublin’s docklands. It took considerable time to secure planning permission. Capel did not skimp on anything when it came to redeveloping the site, always with the intention of holding the homes and the office block as a long-term investment.

A few years earlier Capel had also retained ownership of more than 50 stunning apartments it developed on the site of the former British embassy at Merrion Road in Ballsbridge. That site was bought for a modest £3.81 million in 1997.

The company was set up in the early 1990s by Eddie Keegan, Liam Kelly and John O’Connor, and took its name from its first development venture in Capel Street where it built and sold a block of apartments. They later completed Chandlers Guild apartments on St James’s Street and another impressive apartment block overlooking the Liffey at Chapelizod.

More recently Capel built 60 apartments at Hazelbrook in Churchtown and, apart from some of these which are still for sale at much reduced prices, a part of the site has still to be developed.

At the same time Capel was also building apartments on the opposite side of the city at Ashtown. After selling 200 units at the height of the market the company went on to pay €77 million for an adjoining site with planning permission for over 500 apartments. No sooner had the deal been completed, the property market took a dive. Even before that Capel also paid another €70 million for the Portmarnock Hotel and Golf Links in what turned out to be an intriguing property play. The real value of the Portmarnock facility was based on the potential to do a land swap with another northside golf club in Clontarf.

The members of that club duly voted for the compensation and the move but the plan was finally scuppered by Dublin City Council which owned the freehold of part of the Clontarf club’s grounds. In 2005 Capel also paid over €18 million for the former Sunday World site in Terenure. This is now back on the market at an asking price of €5 million.