Giant US company Jacobs Engineering Inc is set to make a profit of around £7 million on its headquarters building in Dublin, which it acquired three years ago. The company is in negotiations to sell Merrion House, at Merrion Road, Dublin 4, for over £17.5 million - £7 million more than it paid for it in June, 1995. If the deal goes ahead, it will be the largest office investment sold in Dublin this year.
Jacobs's US-based agents LaSalle Partners invited five institutions to tender for the investment and four of them responded. Bruce Bossum of LaSalle refused to comment on the sale while a spokesman for Jacobs said any transaction relating to the complex "is not public information". He explained that owning Merrion House was not a core activity. Jacobs is obviously availing of the strong investment market to free up capital. It is rare for US companies to purchase buildings they occupy in this country. Jacobs employs a staff of 500 in the Republic on the design and construction of industrial buildings. Merrion House and an adjoining two-storey block are currently producing a rent roll of £1,015,4550 - of which Jacobs is paying £300,000. Jacobs has scaled back its use of space in Merrion House in the past three years and now occupies 21,383 sq ft on the second floor and 90 car-parking spaces. It also changed its lease terms before putting the investment on the market. Instead of its original 35year lease, which was not due to run out until 2014, Jacobs is now taking a 10-year lease with a five-year break option. When it bought the investment from Consolidated Land in 1995, Jacobs was expected to seek planning permission to double or even treble the size of the adjoining two-storey block which was occupied for years by Canon but is now sub-let to Swiftcall at £90,000 per annum.
In the event, Jacobs did not enlarge the building but the next owners may well do so. The two office buildings stand on 4.8 acres on one of the busiest suburban roads in Dublin. Telecom Eireann is the largest tenant in Merrion House with 25,646 sq ft on the ground floor which is rented at £292,850. The 35-year lease runs from 1979. Combined Insurance Company of Ireland rents 17,033 sq ft on the first floor and 21 car-parking spaces at £190,000. In 1997, the company sub-let 6,434 sq ft to Bank of Ireland at a rent of £90,140. Another tenant, Software Spectrum, pays £142,700 for 10,584 sq ft under a long lease with a break option in 2004.
The investment market for second-hand office blocks has been particularly slow this year because of a scarcity of buildings other than Georgian houses going on the market. Offices are at the top of the shopping list for most institutions because of increased rental levels.
Two relatively small office investments are among five commercial properties currently for sale. Jones Lang Wootton is quoting a guideline price of £2.2 million for Joyce House at Lombard Street, which is let to the Office of Public Works at £148,000. Also for sale is an 8,500 sq ft building at 15/16 Dame Court, which is let to Telecom Eireann at £62,000. It is expected to make about £800,000.
