Battle for Dublin’s Central Park: Irish REITs each submit JV offers as bidders emerge

Ireland’s two new REITs, Green and Hibernia, headline the list bidding for Dublin’s sprawling Central Park office, multi-family and development complex with separate joint venture partners after more than half a dozen investors submitted first round bids today.

Central Park logoGreen REIT has teamed up with Kennedy Wilson, while Hibernia REIT, which was admitted to the Irish and London stock exchanges at 8am this morning, has also partnered in a joint venture.

CoStar News understands that Apollo Global Management has teamed up with Clancourt Group, the Irish family office, while Hines is also expected to team up for a joint venture bid.

In addition, solo bids are expected from each Lone Star, Blackstone and Northwood Investors. In the summer, expressions of interest were also lodged by Qatari DIAR while Starwood Capital also expressed early interest, but the private equity firm has decided against bidding.

The partnership bids by the Green and Hibernia REITs would reflect a logical break-up of the Central Park portfolio if either were to ultimately win, with the two Irish REITs broadly focused on prime and secondary offices, and uninterested in the multifamily blocks and residential development opportunity.

For Kennedy Wilson, the partnership with Green REIT would be a neat fit, allowing the listed international real estate investor to add further to its Dublin multi-family portfolio, which includes a 50% interest for €82.5m in Dublin’s Clancy Quay in June and the €40m joint venture acquisition of Alliance Building with Fairfax Financial in June 2012.

Jones Lang LaSalle and Savills are jointly selling Central Park on behalf of NAMA seeking offers in excess of €250m for the entire complex, the majority of which was formerly owned by Treasury Holdings.

Central Park is comprised of:

  • five completed office building over 695,168 sq ft, which capture an approximate proportionate €180m of the estate’s value and derives €13.87m of rental income from tenants including Vodafone, First Active, Merrill Lynch, Tullow Oil and Salesforce;
  • 272 apartments in Vantage, an upmarket 281-unit multi-family block approximately valued at €60m, for which nine units have been sold privately, which derive €3.81m in annual income. Within Vantage is 30,711 sq ft of commercial space, of which, 28,755 sq ft or 93.6% remains vacant.;
  • block K is a fractionally started 166-unit multi-family building, approximately valued at €5m;
  • three final unstarted development sites, valued at €8m, for which planning permission has been approved for 166 multi-family units over 706,943 sq ft, including 14,800 sq ft commercial space and basement car parking;

Based on a proportionate value of €180m attributed to the five completed office blocks, this part of the investment would reflect a net initial yield of 7.5%.

The total income for Central Park is €17.98m per annum, although this will increase to €19.33m post rent-free periods.

NAMA, JLL and Savills are expected to start poring over the bids formally tomorrow before informing bidders through to the second round pre the Christmas holidays, and with final bids to be set for end of January.

Within competition considerable, and sentiment within Ireland ever-improving, first round indicative bids are expected to come in around the €250m asking price, although final pricing will sharpen between finalists as more through due diligence is completed ahead of the second and final round.

Bank finance for Central Park would like be available up to 60% loan-to-cost in the improving bank markets, from both domestic banks, such as Bank of Ireland and Allied Irish Bank, as well as a raft of US and European investment banks.

All parties declined to comment.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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