Four secondary office buildings in central Dublin sold less than two years ago as part of a 25-strong mixed-use property portfolio for €152.5 million, are to be offered for sale again in a single lot through joint agents JLL and CBRE.
A price in excess of €28.5 million is being sought for the buildings in Dublin 1 and 7 which formed part of the massive Ulysses portfolio, the former property empire assembled by developer Liam Carroll's Zoe Developments with financing from Bank of Scotland (Ireland).
The original portfolio was acquired by Pimco and Brehon Capital, now trading as Tetrarch Capital which has already sold on two of the other investments: the HQ of the Department of Justice at 94 St Stephen's Green for €16.4 million and Grand Canal House at Upper Grand Canal Street and Clanwilliam Place for €6.5 million. The four buildings now going on the market are at 48-49 North Brunswick Street, 31-35 Bow Street, 89-94 Capel Street and 16-22 Green Street. All four have an overall weighted unexpired lease term of 8.5 years and are currently producing a rental income of €2.37 million.
This will give a new owner an unleveraged return of 8 per cent and a capital value of €3,520 per sq m (€327 per sq ft) based off an overall floor size of 8,092 sq m (87,101 sq ft).
About 98 per cent of the income comes from Government tenants or Government-backed companies. Three of the four blocks are let on single, full repairing and insuring leases to the OPW.
With long-term Irish Government bonds now trading at less than 1.3 per annum, the four office blocks known as the Harp Portfolio offer investors a considerably higher return.
The selling agents suggest that investors are likely to be able to secure attractive debt terms on the portfolio “which will enhance the returns and could provide investors with immediate double digit returns depending on the loan to value ratio they choose to apply”.
The agents argue that the four blocks fulfil an important role in the Dublin office market, providing good value and affordable modern office space, particularly to Government and legal occupiers, which was not available in the core Dublin 2 market.
Rent levels were approximately 50 per cent less than those in the core areas and had started to grow in response to improving market conditions. the Legal Aid Board is the sole tenant in 48-49 North Brunswick Street, paying an overall rent of €685,467 for 1,706 sq m (18,363 sq ft). The lease runs until 2026.
The highest rent of €729,322 comes from 89-94 Capel Street where the OPW rents 2,044 sq m (22,001 sq ft). Moorelands Construction occupies 502 sq m (5,403 sq ft) at a rent of €40,000. The OPW is also the sole tenants in 31-35 Bow Street, paying €450,000 for 1,057 sq m (11,377 s q ft) under a lease which does not run out till 2025.
The fourth investment at 16-22 Green Street has the Irish Human Rights and Equality Commission on three of the six floors on a new 20-year lease with a tenant break option in year 10. It pays €212,860 of the overall rent of €502,190. With only the penthouse level in this 2,781sq m (29,994sq ft) buiding now vacant there is considerable confidence that this area may be let in advance of a sale being agreed.