D2 redevelopment block makes over €82.5m

Offices: Kildare developer Gerry Conlon has outbid Treasury Holdings and Bank of Ireland Asset Management for a strategic office investment at Wilton Place in Dublin 2, writes Jack Fagan

Both Treasury Holdings and Bank of Ireland Asset Management have failed in their attempts to buy in Gardner House, a strategically located office investment at Wilton Place, Dublin 2, which has long term redevelopment potential. The seven-storey block is due to be vacated later this year by PriceWaterhouseCoopers when it moves to Spencer Dock.

The Co Kildare developer Gerry Conlon is believed to have outbid the two main challengers for the investment property, paying more than €82.5 million for it - a long way ahead of the guide price of €65 million-plus.

The Irish Property Unit Trust (IPUT) will clearly be satisfied with the strong price which works out at around €11,841 per sq m (€1,100 per sq ft) - the same value of a newly completed office block.

Neither Niall Gaffney, investment manager of IPUT, nor Fergus O'Farrell of Hamilton Osborne King, was prepared to confirm either the selling price or the identity of the new owner.

However, property sources suggested that Conlon had been the top bidder.

About two months ago he and Dermot O'Rourke secured over €300 million for the partially completed Millennium Park in Naas. After the success of that sale, Conlon would have been anxious to find a new home for the huge profits from that venture.

The two businessmen now own a retail warehousing park which they jointly developed in Naas and which is anchored by B & Q. The park has a value of around €60 million.

However, values are in a different league in Dublin 2 and Conlon may need to find at least another €120 million if he is to gain control of the adjoining IDA headquarters in Wilton Place before embarking on a redevelopment of the entire site. Conveniently enough, the IDA-occupied office blocks, owned by Bank of Ireland Asset Management and Salix, could well come on the market in the coming months if the State promotions body proceeds with plans to move elsewhere.

Gardner House is a little over half the size of the IDA block with 7,000sq m (75,348sq ft) of space dating from 1983. The IDA premises extend to 12,077sq m (130,000sq ft) and, like the PWC space, is in need of refurbishment.

The present jockeying for position suggests that the three adjoining buildings may well be redeveloped as a high density office and apartment scheme with the possibility of doubling the overall size of the development. The location, midway between Leeson Street and Baggot Street Bridge, would make it one of the best sites in the south inner city.

Treasury Holdings had been hotly tipped to buy Gardner House because, not only does it have to pick up the tab for the PWC lease for another 13 years - the present rent is €2.65 million per annum - but it has already paid a surprisingly strong €30 million (€7 million above the guide) for an adjoining apartment block with 40 vacant units on Lad Lane.

Interestingly, Treasury does not have to close that deal until the end of this year. The apartment block has 40 parking spaces at street level but a separate car-park in the basement of the apartment block actually belongs to the owners of the IDA buildings.

All the players will now be watching for Treasury's next move.