ESB Fund seeks £12m for two office blocks in Dun Laoghaire

The ESB Superannution Fund is to sell two office blocks in Dun Laoghaire, with the intention of reinvesting the proceeds in an office building in one of Dublin's main business districts.

The fund is looking for £12 million for the two adjoining office buildings which are occupied by the Swedish telecommunications company Ericsson. The 10-year old blocks at the Adelphi Centre, Upper George's Street, are let on a single lease at a rent of £392,000 per annum.

However, the rent is currently under review and according to John Moran of Jones Lang LaSalle, is likely to be increased from £11.88 to £21.50 per sq ft. There are 42 on-site car-parking spaces rented at £1,000 each.

If the ESB Fund succeeds in having the rent almost doubled, then this will push the overall rent roll up to £750,000. That level would produce a yield of 6 per cent on the asking price. Ericsson occupies the two buildings on a single 25-year lease from 1990 and has a break option in 2010. The company also occupies another block of 30,000 sq ft on the Adelphi site which it sold and leased back about two years ago. The ESB Fund paid under £5 million for the two Dun Laoghaire blocks when they were completed a decade ago. Since taking over the management of the property portfolio, Mr Brendan Donohoe has switched part of its investments from out-of-town locations to city centre properties which have performed particularly well in the buoyant market of the past few years.

Three years ago, it pre-funded two office blocks of 55,000 sq ft at Shelbourne Road in Ballsbridge, Dublin 4, which are occupied by the Irish computer software company Iona Technologies. These offices are rented at £18.50 per sq ft, but even at this stage, have an open market value of around £35 per sq ft. However, the first rent review is not due until 2003. Ericsson has apparently decided to remain at the Adelphi Centre even after it finds a new office campus in south Dublin to develop its operations further.

The company's agent, Druker Fanning & Partners, is currently looking for up to 100,000 sq ft of high tech office space with an option to double the size of the accommodation within three years.

SEVERAL developers are likely to pitch for the business, including Dunloe Ewart in Cherrywood. A number of developers with sites in the Sandyford area are also likely to be in contention.

Ericsson is the third-largest manufacturer of mobile phones in the world, with a market capitalisation of over £9 billion. The company employs 2,300 people in Ireland.