Irish Life leads chase to buy €35m block
Up to eight bidders show interest in AIB-occupied offices at 1 Adelaide Road
1 Adelaide Road, Dublin 2, is being sold off market by the Eircom Superannuation Fund. PHOTOGRAPH: ERIC LUKE
Irish Life has emerged as the front runner to buy an AIB-occupied office block at 1 Adelaide Road, Dublin 2, for about €35 million. The investment is likely to show a return of about 6.4 per cent after acquisition costs are taken into account.
The off-market sale by the Eircom Superannuation Fund has drawn interest from between six and eight bidders, most of them overseas funds attracted by the fact that AIB’s lease has another 11 years to run and also because of the obvious potential for redeveloping and enlarging the office complex.
Rod Nowlan of Bannon, who is handling the sale for the pension fund, said yesterday that it would be “premature to make any announcement at this stage”.
The eight-storey block extends to 5,574sq m (60,000sq ft) and has a surface car park with 55 spaces. The current rent of €2.4 million works out at about €387 per sq m (€36 per sq ft).
Some of the funds pitching for the office block believe AIB may be prepared to pay a reverse premium to be allowed to leave the building well before the lease runs out.
The 1980s block is used mainly for handling cheque transactions but with all government departments, local authorities and State agencies due to stop issuing cheques from next September, it is thought unlikely that the bank will require such a large volume of space for this facility.
One fund estimates that it could possibly get planning permission to enlarge the building to at least 9,290sq m (100,000sq ft) by adding extensions to the front and side.
Incidentally, a former Eircom telephone exchange on a site estimated to be up to two acres directly opposite the AIB building is also likely to be developed as an office complex when it is sold by the former State telephone company.
If Irish Life succeeds in buying 1 Adelaide Road, it will be the third purchase by the insurance company since last August. That acquisition of an office block opposite the former Jurys Hotel in Ballsbridge, Dublin 4, for €15.5 million marked the company’s return to the property investment market after an absence of eight years.
Earlier this month, it went on to spend between €37 million and €40 million on the purchase of two newly-completed office investments at City Gate in Mahon on the outskirts of Cork city.
Irish Life is expected to be up against strong competition from IPUT, Green REIT and Hibernia REIT when it bids on two office blocks in Dublin’s south docklands, developed by Sean Dunne beside an Irish Life-owned block occupied by solicitors Matheson.
The Bloodstone Building has a price tag of €30 million, while the six-storey Block B occupied by aircraft leasing company AWAS is expected to sell for more than €26.3 million.
The fourth office building being sold as part of the Platinum Portfolio, Grand Mill Quay on Barrow Street, is likely to be bought by neighbours Google. Selling agents CBRE and Knight Frank are quoting €42.4 million for the 8,965sq m (96,500sq ft) block, which has a range of tenants including Google.