A private investor has paid in the region of £11 million (€13.967m) for a Dublin office block occupied by the Swedish telecommunications group Ericsson at Beech Hill Office Park in Clonskeagh, Dublin 4. The deal will provide a yield of around 6.2 per cent.
The sale and leaseback by Ericsson is one of two similar transactions being handled by agents Druker Fanning and Partners. The second office investment in Athlone is expected to sell for around £10 million (€12.69m) when it goes to tender today. Several private investors are understood to be chasing the office building, one of the largest in the midlands.
The new owner of the three-storey, 26,700 sq ft building, Trimleston House at Beech Hill, will earn an initial rent of £741,000, (€940,875) the equivalent of £25 (€31.74) per sq ft. Although Ericsson has been in occupation since the building was completed in 1992, a new 25-year lease has been agreed with a break option in the tenth year. There are 98 on-site car-parking spaces.
The Athlone investment comprises three buildings, two of them interconnecting, on a campus-style development less than one mile from the town centre. The two-buildings, joined by an atrium, won a regional award for excellent design in 1999 from the Royal Institute of Architects of |Ireland.
Ericsson will be paying a rent of £1,170,000 (€1.48m) for the complex which has a floor area of 134,325 sq ft. The overall site runs to almost 15 acres. The 25-year lease being introduced in this case will provide for five-yearly upwards only rent reviews and a guaranteed minimum rental growth.
The Japanese bank Nomura was reported to have bought the two Irish investments and 10 more Ericsson buildings in Europe when they first went on the market last March. However, the deal was not completed and the company then decided to readvertise the properties.
The sale and leaseback of the buildings will free up substantial capital to allow Ericsson to further develop its business. Several other high tech companies have adopted a similar attitude to their real estate portfolios in recent years.
The emergence of private investors for both properties underlines the renewed interest by business people in the Dublin commercial market. With life assurance companies less active than in recent years, private investors are beginning to find it easier to pick up investment properties. The outward movement in yields and the sharp fall in interest rates over the last six months has also meant that some deals are almost self financing.
The private investors are by no means having a clear run, as pension funds are still actively looking for well located properties which are likely to show rental growth over the next few years.
