Property investment vehicle Hibernia Reit has paid €52.25 million to acquire the Observatory Building at Sir John Rogerson's Quay in Dublin's south docks.
The building was sold by the National Asset Management Agency (Nama) as part of their “Redwood Portfolio” that was put on the market in April.
The deal comes a month after the group paid €20.16 million for the loan secured on the nearby Hanover Building at Windmill Lane and acquired an adjoining site for €7.4 million.
Following the completion of the Observatory transaction, Hibernia will have concluded eight acquisitions since listing last year.
The Observatory, which was developed by Derek Quinlan and Bernard McNamara in 2007, is a six-storey, modern development that includes up to 86,213 sq ft of office space along with 47 basement parking spaces.
It also includes eight partially completed two bedroom apartment units of 1,400 sq ft each and two vacant retail units totalling 2,059 sq ft.
The office space is over 95 per cent let to a range of tenants, including Riot Games and Publicis, off low average rents of €26 per sq ft, with a weighted average period to break of four years and an average unexpired lease term of 11 years.
More than 44 per cent of the current rent roll has rent reviews during or before 2018 with 56 per cent subject to review in 2019.
The annual headline rent is €2.2milion, of which €1million is currently subject to a rent free period ending in May 2015 and a further €0.2million is subject to a rent free period ending in February 2016. Once the rent free periods have expired, the building is expected to generate a net yield of c. 4.1 per cent.
Hibernia said the purchase price reflects a capital value of €586 per sq ft. for the office space.
Following the completion of this transaction, the company will have concluded eight acquisitions since listing. The group has so far committed €307 million to property deals.
"Our acquisition of the Observatory Building adds another high quality, central Dublin office property with substantial reversionary potential to our portfolio. Its location adjacent to our existing office building and site with planning permission for 125,000 net sq ft of offices on Windmill Lane consolidates our position in this attractive and easily accessible South Docks area and will offer significant benefits in the longer term through active asset management," said Kevin Nowlan, chief executive of Hibernia Reit.
