GLL Real Estate has paid €28m for an AIB bank branch on Grafton Street – and Irish Life is no longer selling a stake in MOPS office block in docklands, writes JACK FAGAN
THE GERMAN fund manager GLL Real Estate has emerged as the new owner of the AIB bank branch on Grafton Street, Dublin 2, which is to be leased back to the bank for a period of 20 years. The investment, costing almost €28 million, will show a net yield of 6 per cent.
Meanwhile, Irish Life is no longer seeking a buyer for a 50 per cent stake in the Dublin offices of solicitors Matheson Ormsby Prentice at Sir John Rogerson’s Quay in the south Dublin docklands.
The initial plan to sell had been prompted by an upsurge in redemptions by investors at its unit linked funds. There is apparently no longer a run on these funds.
GLL’s first incursion into the Irish market will be welcomed by the investment sector where activity has been at a virtual standstill for two years because of the banking crisis and the collapse in property values. There have been relatively few overseas buyers in the Dublin market over the years because of the widely held perception that investment properties were for a long time seriously overvalued.
That view has changed with the recent fall in values by up to 50 per cent. GLL’s high profile in the European and US property markets is expected to trigger further European interest in the Dublin market once the sale of a range of distressed property investments gets under way later this year.
Colm Luddy of CB Richard Ellis, who handled the sale for AIB, said yesterday that the dramatic fall in prices may well be at an end as illustrated by the 6 per cent yield in this case.
Earlier this year, Boodles store on Grafton Street was sold at a yield of 6.35 per cent and a year earlier another German fund, DekaBank, settled for a return of 6.4 per cent when buying the Tommy Hilfiger store.
Luddy said the higher yields were atttacting a lot of international interest but “deal flow” was proving slow. He expected more assets to come on the market as capital would be required to complete developments going into Nama.
John Moran, managing director of Jones Lang LaSalle, said that with the bedding down of the Nama process, they were starting to notice a loosening up in the investment market.
While this had not translated into significant transactional activity yet, there was sufficient evidence around to support a view that liquidity levels should improve from September onwards. It was particularly noticeable that there were a number of new foreign entities that were trying to acquire trophy assets or, alternatively, looking to take advantage of some distressed situations.
Jonathan Hillier of Dublin agency HWBC advised GLL Real Estate.
Meanwhile, Jones Lang LaSalle is understood to have ended talks to sell a 50 per cent stake in the MOPS headquarters which was expected to make around €45 million below the original asking price when it first went for sale in September, 2009.
The agency had been involved in lengthy negotiations to sell the investment to an overseas party.
The entire office development at Riverside 1V was bought by Irish Life at the peak of the market in July 2006 for €170 million. Its current value has probably dropped to close on €90 million, given the negotiations to sell a 50 per cent stake at €45 million.
The building was originally sold to Irish Life by developer Sean Dunne in part exchange for Hume House next to his extensive hotel site in Ballsbridge. The 7,432sq m (80,000sq ft) Hume House had a sale price of €130 million.
The seven-storey over basement MOPS building is part of a larger complex developed by Mr Dunne overlooking the river Liffey.
MOPS pays an annual rent of over €7 million for the block which has a floor area of 12,355sq m (133,0000sq ft). There are 85 car parking spaces in the basement rented at €4,500 each.
The 25-year lease runs from 2007 and includes a break option in year 15.
