IDA drops landlord role

IDA Ireland has disposed of more than one million square feet of industrial buildings in the past 15 months. The sales have brought in more than £21 million.

The IDA, which is responsible for attracting overseas companies, is currently selling the remainder of its property portfolio as part of an overall reorganisation of its business. Since it decided to dispose of its properties, the agency has negotiated the sale of more than 70 buildings to tenants.

The properties are located all over Ireland, mainly in industrial estates. Occupiers, who are all involved in some form of manufacturing, are being given the first option to purchase. The IDA also owns a number of properties which are bound to be of interest to developers and investors. Among these are the Pearse Street Enterprise Centre in Dublin, the 60,000 sq ft Finex building at the International Financial Services Centre (IFSC) and a high-quality office building at the Leopardstown Office Park. This building is currently under negotiation.

According to Mr Conall Harvey, head of the IDA's property division, the Pearse Street Enterprise Centre, which would be of serious interest to developers and investors, is likely to be sold to an institution "who would not be just a private investor". The 200,000 sq ft complex currently produces a rent roll of around £600,000.

Mr Harvey says the IDA was threading carefully because many of the industries in enterprise centres are in start-up situations and are therefore quite vulnerable.

One enterprise centre in Cork has been sold to University College Cork, while another building in Tallaght has been sold to the Get Tallaght Working group. Initially, the IDA concentrated on selling its large units - those with more than 7,500 sq ft. It has already sold about 50 of the 102 properties in this category. Of the properties it owns that are under 7,500 sq ft, the IDA has disposed of 26, or one quarter of the total in this category.

The properties have all been valued independently and many are relatively old. Mr Harvey says the IDA tries to achieve the market price, or a bit more.

He says the take-up to date has been "reasonable' but the occupier's interest depends on their attitude to buying property.

"More and more, manufacturers are taking the view that they are in manufacturing, rather than property," he says.

THE Decision of potential overseas purchasers is usually driven by the parent company's attitude to property, he says. Irish occupiers, who moved into the units when the IDA's remit also covered indigenous industry, have also been exercising the option to purchase.

Mr Harvey says that with interest rates so low, many companies feel it is worth owning the property now, instead of renting it.

Many occupiers are also choosing to buy the properties because if they pass up the opportunity the properties will eventually be sold on the open market. However, Mr Harvey says the IDA has no intention of engaging in a mass disposal of the remaining properties, as it would not be in the agency's or the property market's interest.

The IDA has contacted all the occupiers and is now to embark on a campaign of re-contacting them to see whether they are interested. After that, the agency will begin to offer them elsewhere.

The project represents the biggest disposal of property by a State body in Irish history. The IDA took the view that its role was not that of a landlord and its objectives could be better served by disposing of the property it owns, Mr Harvey says. However, the IDA has also used it as an opportunity to do land swops with local authorities. In many cases, certain properties are attractive to local authorities for distribution or local enterprise projects and so as part of the deal they swop land which the IDA will be able to use for locating new industries. Mr Harvey says disposing of its portfolio will take at least another couple of years. The agency is in no hurry, he says. One thing is certain, whatever happens, it won't take a "big bang" approach and unleash lots of properties on to the market, he says.