Further signs that the property market may be about to offer more investment opportunities comes with the news that Ericsson is to embark on a sale and leaseback of two high quality office blocks, in Dublin and Athlone.
The sales are expected to net around £30 million (#38.1m) for the Swedish group, a world leader in the telecommunications industry, employing 2,500 people in Ireland.
Dublin agent Druker Fanning & Partners is handling the sale of both buildings, which will be leased back on new 25-year leases with five-yearly rent reviews.
Ericsson is one of a number of high tech giants which have opted to sell and lease back their accommodation to free up funds for reinvestment in their core businesses. Ericsson is undertaking a similar exercise in eight other European cities, where 12 buildings will be offered to investors. Other major players pursuing the same policy will be making a pitch to investors over the coming year.
Druker Fanning is quoting guide prices of over £12.5 million (#15.875m) for a 26,700 sq ft office building at Beech Hill Office Park in Clonskeagh, Dublin 4, and £13.5 million-plus (#17.145m-plus) for an award-winning complex of 133,875 sq ft at Cornamaddy, Athlone.
Ericsson will be paying an initial rent of £807,750 (#1.026m) for Trimbleston House, the three-storey office building which occupies a pivotal position at the entrance to Beech Hill Office Park. The company has been in occupation since the building was completed in 1992.
There are 98 on-site car-parking spaces. A price of £12.5 million (#15.875m) would equate to a yield of 6 per cent.
The Athlone investment comprises three buildings, two of them interconnecting, on a campus-style development less than one mile from the town centre. The two buildings, joined by an atrium, won a regional award for excellent design in 1999 from the Royal Institute of Architects of Ireland. Ericsson will be paying an annual rent of £1.17 million (#1.486m) - equivalent to a yield of 8 per cent at the guide price of £13.5 million (#17.145m). Athlone is one of the fastest growing towns in the midlands, helped in part by the decentralisation of the Department of Education to the town.
Druker Fanning said that investment sales of this nature - first-class buildings occupied by a recognised international name such as Ericsson - are very infrequent. It expects competitive bidding for both properties from institutions as well as private investors. The sales will be by private treaty.
Sources in the industry suggested that Ericsson has established a reputation for cashing in on strong international property markets by offloading office buildings and leasing them back. The company has decided that now is an appropriate time to do the same in Ireland, given the immense shortage of prime investments.
Although the company owns three other buildings in the Dublin area - two at the Adelphi Centre in Dun Laoghaire with a combined space of 30,000 sq ft and another block, of 15,000 sq ft, at Beech Hill Office Park - there are no immediate plans to sell them.
With plans to further expand its activities in Ireland, Ericsson has also announced that it is seeking proposals from developers for another 100,000 sq ft in south Dublin, with the option of doubling the size of the space within three years. It is also understood to be looking to rent another 50,000 sq ft of office space in Cork, where it already has a base.
