Niall Gaffney, CEO, IPUT
Best deal of 2013?
We completed two transactions totalling €120 million in March of this year which have both gone very well for us. One purchase was a core income play with the other being an added-value opportunity.
In terms of timing and just being in the right sector, both the acquisition of the A&L Goodbody offices on North Wall Quay and the Irish Airlines property portfolio tick all the boxes. Both deals were completed off market and pushed our office weighting up from 55 per cent to 65 per cent.
Number 25-26 North Wall Quay is a prime 115,000 sq ft office building with 11 years to A&L Goodbody Solicitors. The passing rent of €32 per square foot is below market levels and we anticipate a reasonable rental increase at rent review in 2015. Already producing an income yield of 6.7 per cent, it will provide the fund with further capital and rental appreciation.
The second transaction involved a portfolio of central Dublin office buildings acquired from Irish Airlines comprising 230,000 sq ft of offices situated on St Stephen's Green, Dawson Street, Molesworth Street and Harcourt Street.
The income from the buildings is relatively short; as a result the income yield was over 10.5 per cent with the price reflecting a capital value of only €230 per square foot. We have since applied for planning permission to develop a 120,000sq ft office building on the site of the Passport Office on Molesworth Street.
We expect both acquisitions will contribute significantly to our performance in 2014 and beyond.
Aidan O’Hogan, chairman, Property Industry Ireland
Best buy of 2013?
I particularly admire the Clancy Quay deal. Launched into the market last April, it represented an almost unique, partially but carefully developed 14-acre site within 3km of the city centre.
It’s location just immediately south of the Liffey and with extensive river frontage, has been undervalued. The changes that have taken place in the immediate environs over the past 10 years have transformed the area.
Now with the Luas and Heuston station almost immediately adjacent, the law courts on its doorstep and Heuston South Quarter just up the road, as well as all the amenities in the Phoenix Park, it’s a perfect location for a family- focused rental development. How rare is it to find all those features in one development?
It also has 420 well-designed and built one- to three-bedroom units on a self-contained 5.4acre site and a further 3,400sq m of developed commercial space.
It gave a net initial return of about 6.5 per cent. But that’s only half the story. There are a further 8.5 acres of land with planning permission for another 323 residential units, and almost 15,000sq m of commercial, creche and educational or hotel space.
The €82.5 million Kennedy Wilson is reported to have paid looks to be just about as close to perfect as you can get given the shortage of residential accommodation for rental and sale among other factors.
Michele Jackson, director, DTZ Sherry FitzGerald
The best buy of 2013?
This year saw the return of liquidity to the Irish investment market with demand continuing to outstrip supply. The majority of the successful buyers were investors with mandates to assemble balanced portfolios. With 105 transactions in the year to date, totalling €1.6 billion, the top three account for 38 per cent of this figure and were all portfolios.
The strong demand for Project ARC, Ulysses and the Opera portfolios shows the appetite from investors for opportunities that assist in fulfilling their mandate and provides exposure to the key markets. In 2013 many investors were frustrated as they were unable to deploy capital expediently into a rising market.
The acquisition by Kennedy Wilson of the €306 million Opera portfolio in Q3 was a deal that delivered the exposure and scale to sectors that many investors are seeking as it accounted for 20 per cent of the market activity. The portfolio comprises 14 assets offering a combination of long income and asset management opportunities in both the retail and office sector with about 95 per cent of the asset value located in Dublin.
The portfolio benefits from good underlying income from grade A tenants to include KPMG, Bank of Ireland, Tesco and M&S. The key assets include Stillorgan Shopping Centre; 40/42 Mespil Road, Dublin 4; 35/36 Barrow Street, Dublin 2; Baggot Building Dublin 4; Marks & Spencer, Merchants Quay, Cork; the Warehouse, 35 Barrow Street, Dublin 2 and blocks A-D Russell Court, Dublin 2.
While the portfolio has many synergies there is also strong demand for the key assets individually which gives investors flexibility in their exit options.
