Ballsbridge portfolio down 66% to €19.4m

TWO OFFICE buildings and a residential mews bought close to the peak of the property bubble when developers were jockeying for stakes in the planned high-rise redevelopment of the centre of Ballsbridge, Dublin 4, are back on the market at a fraction of their original cost.

DTZ Sherry FitzGerald is quoting €15 million for Carrisbrook House, an eight-storey over basement office building across the road from the former Jurys Hotel on Pembroke Road. It was bought early in 2007 for €46 million.

Another office block occupied by AIB at 85 Pembroke Road, sold in 2005 for €10.5 million, is now available at €3.9 million while a residential mews at 122 Baggot Lane has a guide price of €500,000.

All three investments are being sold on the instructions of Declan McDonald of PwC who was appointed receiver to the holding company by the Danish-owned National Irish Bank. The buildings formed part of a larger portfolio in Ballsbridge acquired by Bernard McNamara, Gerry O’Reilly and David Courtney when they competed against several other developers for key properties in the immediate area.

Despite the buying frenzy on all sides when Ballsbridge values peaked at €133 million an acre, the planners did not see merit in any of the proposed high-rise schemes. In most cases it has now been left to the banks and Nama to pick up the pieces.

Michelle Jackson of DTZ says they have already had local and overseas interest in the three Ballsbridge properties which are currently producing a rental income of €1,542,400 per annum.

The overall price of €19.4 million now being sought for the three investments is around 66 per lower than the original €56.5 million paid for them.

Carrisbrook House is expected to appeal to a developer or institution because of the long-term rental income available from it until it is redeveloped and enlarged.

State agency Forfás is locked into an unusual 65-year lease which does not run out until 2034. The agency pays an annual rent of €1.18 million for the 43-year-old hexagonal block which extends to 2,957sq m (31,823sq ft) and includes 65 car-parking spaces.

The current rent of €377 per sq m (€35 per sq ft) was set in 2004 and is subject to seven-year upwards-only rent reviews with no break options.

Apart from the fifth floor which is rented by the Embassy of Israel, the building has been largely unoccupied since 2005. The embassy’s 35-year sublease dates from 2005 and gives it break options every five years.

This arrangement means that whoever buys the building will eventually have to negotiate the departure of the embassy before they can redevelop the block.

Those pitching for Carrisbrook House are also likely to acquire the adjoining three-bedroom mews and grounds which adjoin the site and are currently rented at €17,400 per annum.

The consortium headed by McNamara also acquired an adjoining filling station to facilitate a larger redevelopment but it is not being offered for sale at this stage. The office block will show an initial yield of 7.53 per cent after acquisition costs of 4.6 per cent are taken into account.

The second office investment going for sale close by at 85 Pembroke Road is expected to sell for around €3.9 million – a price which will show a return of 8.46 per cent. The 874sq m (9,410sq ft) building is let to AIB Capital Markets Corporate Finance Ltd on a 35-year lease from the end of 1989 with no break options. The current rent is €345,000 per annum.

Should the new owner decide to redevelop the site, AIB could be expected to pay a substantial reverse premium to be released from the lease. The bank will have plenty of space to accommodate Capital Markets in its nearby headquarters once it slims down its entire operation.

Michele Jackson said that with Ballsbridge widely recognised as the premier property location in the city, the portfolio now going for sale would have wide appeal because it had an excellent blend of long secure government income and redevelopment opportunities in the future.