Avestus Capital Partners and Ares Asset Management are in line for a return of about 14.5 per cent on their original investment in a prime Dublin office building following its sale to a European real estate investor.
Having acquired blocks 4 and 5 Harcourt Centre from the Clancourt Group for €47 million in September 2017, Avestus and its joint venture partners have secured about €55 million from its sale to Arena Invest. Kyle Rothwell, head of investment properties at CBRE, handled the transaction on behalf of the vendors.
The news of Avestus and Ares’ disposal of the Harcourt Centre blocks follows last week’s report by The Irish Times on the partnership’s €60 million sale of two other office buildings – One Kilmainham Square in Dublin 8 and Classon House in Dublin 14 – to French investor Corum.
While Corum’s purchase of the properties for €33 million and €27 million respectively brings the overall value of its portfolio in Ireland and Northern Ireland to €206 million, 4 and 5 Harcourt Centre represents Arena Invest's first investment in the Irish market.
With its purchase of the property, Arena will secure the benefit of immediate rental income of €3.02 million per annum, which reflects a yield of 5 per cent.
Located at the heart of Dublin’s central business district, the investment consists of two adjoining properties comprising 5,016.7sq m (54,000sq ft) of office accommodation and 2,238sq m (2,400sq ft) of retail space.
Block 4 comprises a six-storey over basement building extending to 2,603.14 sq m (28,020sq ft) of office accommodation and 132.2sq m (1,423sq ft) of retail accommodation, together with 23 car-parking spaces. The building is finished to Cat A standards with good levels of natural light. The design of the building allows for flexibility and offers potential to drive value through the provision of additional floors to this block, subject to planning permission. The combined rent roll of the building is about €1.42 million per annum and is derived from lettings to Regus and Cafe Sol.
Block 5 comprises a six-storey over basement building extending to about 2,487.2sq m (26,722sq ft) of office accommodation and 89.93 sq m (968 sq ft) of retail accommodation, together with 17 car-parking spaces. The building was constructed in 2001 and refurbished in 2015. Those works saw the addition of one extra floor which was successfully let in 2016 to Zara. As is the case with block 4, there is an opportunity for Arena Invest to enhance the value of the building through the provision of additional floors, subject to planning permission. The combined rent roll of the building is €1.6 million per annum, and is derived from lettings to SMT Fund Services, the National Transport Authority and Zara.
While the subject property is situated within close proximity to St Stephen’s Green and Dublin’s prime central business district, Harcourt Road and its immediate environs have in recent years become a core office location in their own right.
Existing occupiers within the vicinity of 4 and 5 Harcourt Centre already include Deloitte, Aviva, EY, Bank of China, AIB, Mazars, Arthur Cox, Eversheds and Capita. A number of developments in the vicinity are expected to consolidate the area's standing as a prime office location such as Hibernia Reit's development of offices on the site of the Garda's regional headquarters at Harcourt Square and Clancourt Holdings' proposed delivery of a major office scheme at 5-8 Charlemont Street.
Blocks 4 and 5 Harcourt Centre also benefit from a range of amenities with numerous cafes, bars and restaurants nearby, while the five-star Conrad Dublin and boutique Dean Hotel are within walking distance.
The area is well served by public transport with the Luas green line and Dart services within a short walk.