OfficeInvestment: Bernard McNamara is selling his stake in an IFSC office to concentrate on a large €250m mixed scheme in Dublin 4. Jack Fagan, Property Editor, reports
Leading property developer Bernard McNamara is to sell his 50 per cent stake in the McCann FitzGerald headquarters building at 2 Harbourmaster Place in the IFSC just as he gears up with partner Gerry O'Reilly to build a €250 million mixed residential and commercial complex at Merrion Road in Dublin 4.
David Courtney of Spain Courtney Doyle is quoting a guide price of €30 million for the investment near the front of the IFSC which carries hugely valuable tax allowances of €15.68 million. At that price, the net yield would work out at 4.5 per cent before the allowances are taken into account.
Mr McNamara bought the 12-year-old office block from Irish Permanent towards the end of the 1990s and subsequently sold a 50 per cent stake in it to the Hibernian Group as part of a larger property deal. He retained control of all the capital allowances which will appeal to a range of profitable companies.
The sale is complicated by the fact that McCann FitzGerald is planning to relocate to Grand Canal Docks where a new €90 million headquarters is to be built over the next two years or so. Partners in the top corporate law firm are expected to net up to €35 million from a pre-sale and leaseback of the building with Quinlan Partnership and Alanis.
However, the legal firm does not have any break options in its lease which has another 22 years to run. The partners will obviously be hoping that, by the time their new headquarters is completed, the office market will have experienced a recovery to enable them to assign the lease to either a new trader or an existing international company looking for larger premises in the IFSC.
The overall rent for the seven-storey, 5,705.3 sq m (62,412 sq ft) block is €3,026,801. The rent works out at €502 per sq m (€46.66 per sq ft) which is probably at or near the top end of the rental market in the IFSC. There are also 54 car-parking spaces in the basement producing €3,175 each.
The lease is held by named individuals in McCann FitzGerald in their personal capacities. There are upward only rent reviews at five yearly intervals, the last one in 2001.
The block is the third large building to come on the market in the IFSC in recent years. Both Bank of Ireland and AIB managed to offload their buildings at the front of the financial services centre though the Government intervened to block AIB from selling on the capital allowances which were tied to its block.
Hugh Lenehan of the Hibernian Group says the McCann FitzGerald block has been greatly enhanced since the removal by CIÉ of the ramp into Connolly Station. "It now has a much better presence on the street."
Mr McNamara has been one of the main driving forces behind the Irish property boom in recent years and, apart from his wide ranging role as a developer, he has also completed some of the biggest and most complicated construction projects in Dublin and other parts of the country.
The Elm Park development now getting under way on Merrion road will be one of the largest in Dublin 4 in recent years. The 102,193 sq m (1.1 million sq ft) scheme will include 330 apartments, 30,658 sq m (330,000 sq ft) of offices and an eight-storey hotel and private hospital at the front of the site. There will also be 101 two-storey homes for the elderly and a 900 space basement car-park. The developers have also bought in the adjoining Tara Towers Hotel for €14 million and plan to add a further 60 bedrooms to bring the number up to 160. The entire development is likely to take up to 36 months to complete.
