There is likely to be strong interest from private investment syndicates in the sale and leaseback deal on Eircom's new HQ, writes Jack Fagan
Eircom's distinctive new nine-storey headquarters building - currently under construction opposite Heuston Station in Dublin 8 - is to be sold under a sale and leaseback arrangement following similar successful deals earlier this year by AIB and Bank of Ireland.
Jones Lang LaSalle, which is selling the investment on behalf of Osprey Property Ltd, the property development arm of Eircom, is quoting a guide price of €180 million for the investment which will produce an annual rent of €8 million.
At that price, the lease would run for 15 years and the transaction would show a net yield of 4.25 per cent.
Those interested will also have the option of bidding higher figures for 20-year and 25-year leases.
Eircom is apparently confident of achieving a sale at a yield of 4.25 per cent, following at least two other investment sales which showed lower returns.
Hibernian's recent purchase of the original AIB headquarters building in Ballsbridge for €170 million will show a yield of 3.7 per cent.
Irish Life also settled for a similar return when it completed the purchase this week of a new office building at City Quay for around €72 million.
Eircom will be paying an initial rent of €376 per sq m (€35 per sq ft) for the new building which will have a floor area of 19,550sq m (210,436sq ft) and €3,500 for each of the 190 car-parking spaces at basement level.
Designed by Brian O'Neill of Anthony Reddy and Associates, the landmark block will have several atriums, air conditioning and third generation specification.
"This is a triple 'A' investment involving a superb building, an excellent tenant, a great location beside a large choice of transport facilities and a new Heuston South Quarter (HSQ) city district which is being built in the area," says John Moran of Jones Lang LaSalle.
The Eircom headquarters will adjoin an even larger development, Westgate, which is to be carried out by the Galway developer Padraig Rhatigan.
Last year he paid €77.6 million for 8.2 acres which were owned by Eircom and the Office of Public Works.
There is full planning permission for a substantial office, retail and apartment scheme, as well as a hotel and a new building for the nearby Irish Museum of Modern Art.
The first tranche of apartments on this site is due to be sold off plans later this week.
Westgate and the Eircom headquarters are predicted to do for the western end of the city what the IFSC did for the eastern edge about 15 years ago.
Among the features planned for the area is a 32-storey building which would be one of the tallest in the country.
With revenues of €1.7 billion, Eircom is the country's leading telecommunications supplier with a 74 per cent market share of the fixed line market and, through Meteor, 16 per cent of the mobile market.
Eircom, recently taken over by Babcock & Brown, says that its decision to move ahead with a sale and leaseback deal for its new headquarters is designed to free up capital to re-invest in its "core business".
Many customers will be hoping that this will include a further rolling out of the national broadband service.
The Eircom building is in the Heuston Framework Development Area, bounded by St John's Road, Military Road and the Royal Hospital.
As well as having excellent transport links - through Heuston Station, the Luas, quality bus corridors and road network - the area has an enviable mixture of residential, leisure and cultural amenities.
