US property giant poised to snap up One Spencer Dock

US property giant Hines is in pole position to buy Ireland’s largest single office investment, One Spencer Dock on Dublin’s NorthWall Quay, after outbidding two other investment companies with an offer close to the asking price of €240 million.

The under-bidders for the landmark building let to PwC are the Irish property fund IPUT and an investment company linked to the London-based financier Alan McIntosh.

If the sale is completed, the new owners will be able to bank on a net yield of about 4.7 per cent, which was at the top end of Nama’s expectations when it decided to put the investment on the market.

The joint selling agents, CBRE and Savills, did not return calls yesterday.

Major investor

Hines is already a major investor in the Irish commercial property market having joined forces with HSBC Alternative Investments (HAIL) last February to buy a 72.8 per cent stake in Dublin’s Liffey Valley Shopping Centre for €253 million.

Hines also teamed up with King Street Capital to acquire a 400-acre site at Cherrywood in south Dublin for more than €280 million.

The nine-storey over basement PwC office complex is the most spacious in the city with an overall floor area of 21,054sq m (226,624sq ft). It was developed in 2007 by the now defunct Treasury Holdings, which folded with debts of €2.7 billion.

The river-front offices have three interconnecting blocks which are widely regarded as among the best in the city.

The office accommodation is fully let to PwC under 25-year leases which provide for upwards-only rent reviews every five years. The leases have more than 16 years to run. The overall rent is understood to be be in excess of €11 million per year, working out at close to €538 per sq m (€50 per sq ft).

A small proportion of the office space is sub-let to ABN Amro and Ecclesiastical Insurance. PwC recently indicated that it planned to sub-let about 4,053sq m (43,625sq ft) at a discounted rent in the mid €40s per sq ft. However, there is some doubt as to whether it will proceed with this plan following an announcement last Monday that it plans to recruit more than 500 people in Ireland next year.

CIE land

One Spencer dock was developed on land owned by CIE and under a development agreement the State transport company was to have a 17.5 per cent interest in the freehold. A private fund linked to Davy subsequently bought out CIE’s interests for about €20 million and and will be entitled to its share of the investment sale when it is eventually wrapped up.

Spencer Dock and the adjoining areas are to undergo substantial changes in the next few years under Project Wave, which will see Sean Mulryan’s Ballymore Develpments and Singapore company Oxley develop more than 50,000sq m (540,000sq ft) of office and 250 apartments at North Wall Quay. Close by, work is well advanced on the completion of the new Central Bank headquarters.

Two months ago the Central Bank surprised the investment market by buying a partially vacant 11,943sq m (128,567sq ft) Block R at Spencer Dock for €104 million, €14 million above the guide price. The proceeds of the sale have to be distributed among the original investors.