Davy buys Mespil offices for over €16m

Davy Property Investments has upstaged investors Kennedy Wilson and developer Johnny Ronan by purchasing a strategically located office investment at the junction of Mespil Road and Burlington Road in Dublin 4 for over €16 million. The two under bidders own office buildings on either side of the block, which is set to be redeveloped as a major corporate headquarters.

Unconfirmed reports suggest that Ronan and Kennedy Wilson made a joint bid which fell short of that by Davy.

Meanwhile, the fast pace of sales in recent weeks is expected to encourage Nama to proceed with the disposal of retail as well as distressed office investments.

Two shopping centres owned by Liam Carroll's Danninger company, Bloomfields in Dún Laoghaire and The Mill in Clondalkin, are likely to be offered for sale following the disposal of 24 other property investments held by him, mainly in central Dublin.

The Californian investment firm Pimco and Dublin-based Brehon Capital have paid €155 million for 25 properties in the Ulysses portfolio which will give them a return of 8.7 per cent.

John Moran of Jones Lang LaSalle had been seeking offers over €140 million for the portfolio which had been valued at close to €2 billion during the boom.

The only property not belonging to Mr Carroll was the Department of Justice building on St Stephen’s Green, owned by Galway-based James E Cormican and his wife Helen. The new owners are expected to sell on some parts of the portfolio which has no fewer than 90 different tenancies.

High vacancy rates
Although many of the leading shopping centres in Dublin and the provinces are in Nama, there have been relatively few sales so far because of uncertainty about current values and the high vacancy rates in most of them which are frequently disguised by pop-up shops and other temporary traders.

Davy is expected to retain its newly acquired office block at 43-49 Mespil Road for up to four years while it is still rented by the Office of Public Works. By then it will inevitably have increased in value and with the owners able to avail of the moratorium on capital gains tax they should be in a position to sell it off at a handsome profit.

Alternatively, Davy will have the option of re-gearing and extending the lease to the OPW. The State is currently paying a rent of €1.66 million for the 3,961sq m (42,639sq ft) building and 21 basement car parking spaces.

The 30-year-old block was held as an investment by the now defunct Treasury Holding which had planned to replace it with a high-profile headquarters extending to 8,361sq m (90,000 sq ft). Its plan to pre-let the building before embarking on its construction failed once the property market crashed.

Though the planning permission eventually ran out in August 2010, the 0.19 of a hectare (0.47 of an acre) corner site remains one of the most sought after in central Dublin because of its location at the entrance to the booming Burlington Road office district. The six-storey block overlooks the Grand Canal on Mespil Road and has an entrance to its basement car park on Burlington Road.

The building stands between Connaught House, a Grade A office block owned by Ronan, and the new Bank of Ireland headquarters which was among 16 Treasury Holdings properties sold to US investor Kennedy Wilson for €306 million.

Dessie Kilkenny of Savills handled the sale of the Mespil Road building for Sean McNamara and Liam Dowdall of Smith & Pearson who were appointed receivers by Ulster Bank.