US property group pays €52m in deal for 214 Dublin apartments

Republic’s newest institutional landlord Heitman has bought 27 buildings in capital

US property player Heitman paid €52 million to private individuals for the 214 apartments that the firm bought in Dublin this week.

Heitman, a $44 billion (€40 billion) firm which buys real estate and invests in property companies, became the Republic’s newest institutional landlord when it bought 27 buildings with a total of 214 apartments in various parts of the capital.

The firm did not reveal the price when it announced the deal, but it was confirmed yesterday that Heitman paid a total of €52 million for the properties, an average of more than €1.9 million each.

Heitman has not named the sellers. It is understood that they are private individuals rather than one of the investment funds or banks that have been dealing in Irish rental properties in recent years.

Project Circle

The sellers put the 27 buildings, collectively dubbed Project Circle, on the market earlier this year. The sale took several months to complete. Real estate specialist, Savills, was the agent.

The properties are generally older, refurbished buildings in neighbourhoods including Broadstone, Clontarf, Fairview, North and South Circular roads, and Rathmines and Ranelagh.

All the apartments are let. Recent figures show that one-bed dwellings in Rathmines, close to one of the Heitman properties, were letting for €1,500 a month, while two-beds in most of the postal districts where the US company has bought fetch €1,700 to €2,000 a month.

Heitman is unlikely buy more properties in the Republic. The individual fund from which it made the €52 million Project Circle purchase is understood to be almost exhausted.

Also, the US buyer's view of the capital's property market dimmed after the Minister for Finance, Paschal Donohoe, hiked stamp duty on commercial real estate deals to 7.5 per cent from 6 per cent earlier this month.

Earlier this week, Tony Smedley, the US firm's head of European private equity, indicated that the capital's housing squeeze, which has pushed rents to record levels, lured it to the Republic.

Heitman is likely to hire a local agent to manage the estate it acquired in this week’s deal. The firm has no presence on the ground in the Republic, but has an office in London.

Biggest draw

Based in Chicago, the US company manages $44 billion for pension funds, insurers and wealthy individuals. Heitman invests this in properties and real estate businesses in North America, Europe and Asia. It employs 325 people.

High rents have made apartments the biggest draw for investors in Irish property. According to figures from Hooke & MacDonald, in the first nine months of this year, investors paid €1.345 billion for more than 3,350 apartments in the capital.

German fund, Patrizia, recently agreed to pay €93 million for 160 apartments in Harold's Cross that the Pat Crean-led Marlet is building, while Cairn Homes is selling 282 dwellings to Urbeo, the Irish venture backed by US fund Starwood Capital, for €94 million.

Such deals accounted for more than half all commercial property transactions in the capital in the third quarter of this year.