With the Dublin office investment market attracting ever increasing interest from overseas buyers following the sharp decline in values, a modern city centre block going for sale today is expected to be of equal interest to Irish investors looking for a safe haven for their funds.
Agents Jones Lang LaSalle is quoting €4.5 million for Lavery House, a 15-year-old building at Earlsfort Terrace, Dublin 2, which will show a net initial yield of 9.57 per cent.
Over-rented
The 696sq m (7,500sq ft) block is let to the partners in Hayes Solicitors under a 25-year lease from October, 1997, at a current rent of €450,000 per annum. The lease includes storage and 10 car parking facilities.
Investors bidding on the block will be aware that it is over-rented at €532 per sq m (€49.50 per sq ft), given that the going rate for a building of this quality in the south inner city is little more than half that figure.
Though the lease provides for upwards-only rent reviews, the current owners understandably did not trigger a review last month when one was due. The likelihood is that the rent will stay at its current level for the foreseeable future.
However, the vendors will be relying on the fact that the well located block – it is almost on the edge of St Stephen’s Green, opposite the National Concert Hall – has 9.75 years remaining on the lease and comes with a particularly strong covenant in Hayes, a versatile law firm providing a full service for corporate and private clients in Ireland and overseas.
Max Reilly of Jones Lang LaSalle said the quality of the investment was underpinned by the excellent location, profile, tenant and income length and would appeal to a wide range of buyers.
With an initial yield of more than 9.5 per cent it would provide a strong margin over borrowing rates, he said.
Lavery House was developed by the current owners Davy Hickey Properties who are more readily associated with Citywest, Dublin’s leading business park where 120 companies from nine countries are currently trading.
Occupied
About a month ago, Davy Hickey announced the planned sale of a large top grade office development at Citywest occupied by the German software giant SAP. Agents DTZ Sherry FitzGerald are seeking €15.5 million for the 6,969sq m (75,000sq ft) complex, which will give the next owner a return of 10.13 per cent.
