Sweedish group expected to get £16.5m-plus for Dublin offices

SWEDISH group Aranas AB is virtually to withdraw from the Dublin property market following its decision to sell three office blocks, which are almost fully let.

Hamilton Osborne King is shortly to offer the three buildings for sale by tender in one lot or on an individual basis in the expectation that they will make between £16.5 million and £17.75 million.

The sales come at a time when there is an acute scarcity of investments on the market for institutions, property companies and private investors.

Aranas first entered the Dublin market in 1988 but has experienced mixed fortunes because of the downturn in the office letting market after it developed two of the blocks, Europa House at Harcourt Street, and another third-generation block at 65/66 Lower Mount Street. Although both buildings are acknowledged as being among the best outside the Custom House Docks, they took a considerable time to let, particularly the Lower Mount Street block, which was launched at the depth of a recession in the office market.

Aranas undoubtedly took a drubbing on both investments but did considerably better on the third investment, Iveagh Court, at Harcourt Road, Dublin 2, which it bought and later refurbished at a cost of £750,000.

Aranas is a property development and investment company with more than £1 billion in investments across Europe.

Liam Lenehan of HOK said Aranas was availing of the current strong investment market in Dublin to dispose of some of its interests in Ireland. It would continue to retain other properties it owns in Dublin. He said Aranas frequently bought and sold development sites and investments across Europe.

The company's remaining assets in Dublin are understood to include a two-acre development site adjacent to Europa House at the rear of Harcourt Street.

The three office blocks now going on the market are all multi-tenanted and are currently producing a rent roll of £1.3 million. The agents say there is potential for a substantial uplift in rents in each of the three buildings.

Mr Lenehan said Europa House and Mount Street were the only occupied third-generation office blocks outside the IFSC to be offered for sale in recent times and they were likely to be of interest to institutions. Investors would also have an option of acquiring two companies holding the properties which have incurred substantial tax losses.

The overall average yield from the three blocks is likely to be about 7.75 per cent. Depending on whether the buildings are sold on their own or in holding companies, Europa House is likely to make between £9.5 million and £9.75 million, representing a yield of 6.75 per cent; Lower Mount Street is understood to be worth between £3.5 and £4 million, at a yield of about 7.5 per cent, while Iveagh Court should also sell for between £3.5 and £4 million with a yield of about 9 per cent.

Europa House, a 43,500-square-foot block with 54 car-parking spaces, is currently producing £670,000 per annum from tenants which include the Embassy of Brazil; Bank of Bermuda, Eurotel Marketing, Europa Business Centre and Zurich Insurance Co.

The 18,350-square-foot office block in Lower Mount Street is one of the most distinctive in the city and was designed by A+D Wejchert. The current rental income is £280,000 and the tenants include GAM Fund Management, Fimat-Societe Generale, Point Information Systems and Watson Wyatt Worldwide. The block has 16 car-parking spaces.

Iveagh Court has 27,000 square feet and 36 car-parking spaces. Current rent roll is £350,000 and the tenants include Food Industries, Mitsubishi Trust Finance, Hodgins Percival and Associates, Industrial Consultants International, Source Supplies and Irish Life.