€75m for distressed portfolio

A MIXED-USE portfolio of apartments, retail buildings and a hotel going for sale today is expected to test the strength of the secondary market for distressed property assets.

The Ulster Bank has appointed receivers KPMG and Grant Thornton to handle the sale of 640 apartments in Tallaght and East Road in Dublin and Dennehy’s Cross in Cork. Retail buildings and a 48-bedroom hotel are also available in Tallaght along with a retail store at Dennehy’s Cross rented by Tesco.

Donhnaill O’Sullivan of Savills is quoting an overall guide price of €75 million for what is the largest mixed-use portfolio of properties to be offered for sale since the property market collapsed. Prices are understood to have been reduced generally by about 70 per cent since the peak in 2006 and 2007. If an overall purchaser does not emerge, the selling agent will invite offers for individual blocks.

With a high occupancy rate in all the completed apartments, the overall rent roll of €5.56 million will show a net initial yield of 6 per cent. Savills estimate that overall rents could reach around €8.5 million when unoccupied apartments are fitted out and vacant commercial units are let.

O’Sullivan says the asking price is significantly below the replacement cost of the assets and allowed investors to buy at the bottom of the cycle. He believed that more than 2,000 apartments could come on to the market in the next 12 to 18 months.

Paul McCann of Grant Thornton is receiver to the Liam Carroll company which developed Tallaght Cross East in Tallaght, Dublin 24. The town centre scheme consists of 345 apartments in five blocks with 15 retail units on the ground floor totalling 16,224sq m (174,631sq ft).

A 48-bedroom hotel which traded for a short period stands above a two-tier underground car park with 389 spaces. The overall scheme is adjacent to the Luas Red Line between The Square shopping centre and Tallaght Hospital. Around 94 per cent of the 345 apartments are currently rented mainly to eastern European workers. The rent roll of €3,244,512 reflects rents of €740 for one-bedroom apartments, €887 for two-bedroom units and €1,030 for three-bedroom homes.

About one-third of the retail space is also let, the largest unit to Marks Spencer on a 20-year staggered rent from 2007 starting at €460,628 and rising to €861,256. A Spar convenience store rents its space at €100,685, subject to a 25-year lease.

The vacant Glashaus Hotel with 48 bedrooms is fully fitted and includes a bar, lounge and restaurant. There are several elevators to the upper floors.

Kieran Wallace of KPMG is receiver to Ellen Construction which developed Island Key on East Road in Dublin 3. It is about half way between East Point Business Park and the O2 arena.

Of the 153 apartments in four blocks, 53 of them will require an expenditure of about €3 million before they can be let. Gross rental income from the remainder of the apartments is €1,205,400.

The development also includes 1,124sq m (12,098sq ft) of vacant commercial space and a basement car park with 114 spaces. Savills estimate that the rent roll should rise to €1.9 million when the remaining residential and commercial units are rented.

Kieran Wallace is also receiver to the mixed-use apartment and retail development in Dennehy’s Cross on the western edge of Cork city. The Franilla-built scheme includes two blocks of apartments with 142 units, 1,372sq m (14,768sq ft) of commercial space and a basement car park with 214 spaces.

A total of 47 apartments are let and the remaining 95 are being fitted out. Revenue from the rented apartments is €509,320, a figure that is expected to rise to €1.56 million when the scheme is fully completed.

Around one-third of the commercial space is rented by Tesco at €133,056 per annum.

The multiple’s first break option is in 2024.