Henley Bartra looks to be in line for a significant return on its investment in Phoenix House in Dublin 8.
Just over one year on from its purchase of the property for €8.5 million, the company is offering it to the market through agent TWM at a guide price €16 million.
But while that pricing suggests the UK-headquartered Henley and joint venture partner, developer Richard Barrett's Bartra Capital, could be about to double their money, it doesn't take account of the asset management the company has engaged in since acquiring the acquiring the five-storey office block in April 2018,
Phoenix House has undergone a major refurbishment within the past year, with works including the installation of VRF air conditioning, raised floors, suspended ceilings, LED lights, a new reception, refurbished toilets and cores, new lift cars, new cycle facilities, the installation of showers and lockers at basement level along with the upgrade of the facade and entrance area.
More significantly however, Henley Bartra has leased Phoenix House in its entirety to the OPW. At the time of the company’s purchase last year, the State agency was in occupation of just two floors at the building.
Rent review
The OPW now occupies all five floors at Phoenix House (37,234sq ft) under two full repairing and insuring leases. The lower-ground, ground and first floors (22,683sq ft) are let under a new 10-year lease at a rent of €647,075per annum, while the second and third floors (13,622sq ft) are let under a 25-year lease from February 1999 at a current rent of €365,000 per annum.
The rent review in relation to this lease remains outstanding and the new owner can expect an increase in this rent. At an average overall current rent of just € 23.70 per sq ft, there is significant scope for rental growth The weighted average unexpired lease term is 7.7 years.
Phoenix House occupies a high-profile and highly-accessible city centre location opposite the Phoenix Park and immediately adjacent to the Heuston Gateway. This area has witnessed a surge in investment activity in recent years.
Only recently, Henderson Park acquired the Heuston South Quarter mixed-use scheme for €222 million, while in September of last year, developer Joe O'Reilly's Chartered Land paid €30 million for the landmark Hickeys site on nearby Parkgate Street. Diageo meanwhile is expected to select a development partner from among Ballymore, U+I and Hines shortly for a 5 hectare (12.6 acre) mixed-use scheme at Guinness's brewery to be known as the St James's Quarter.
Sean O’Neill of TWM says: “At a price of €16m, the investor can expect to secure an initial yield on settlement of the outstanding review in the region of 6.5 per cent. This is a very attractive return for Government income in this highly sought-after, established and constantly-improving, location.”
Henley Bartra continues to be an active investor in the Irish market. Earlier this year, the company paid €125 million in an off-market deal for a portfolio of office and data centre assets comprising nearly 46,450sq m (500,000sq ft) of space at Citywest Business Campus in Dublin and Cork Airport Business Park. The transaction represented Henley Bartra's largest single acquisition to date.
