Green REIT has completed the protracted €375m acquisition of the Sapphire portfolio after vendor Cosgrave agreed a discounted pay-off on the defaulted debt which secured the Dublin office and retail portfolio.
The protracted closure of the Cosgrave property portfolio has been due to two reasons. Firstly, a €250m lawsuit issued by Peter, Joseph and Michael Cosgrave against Ulster Bank over alleged mis-sold interest rate swaps. The case against Ulster Bank was dropped around six weeks ago.
Secondly, Cosgrave has been negotiating the discounted payoff of the estimated €600m of loans against its property portfolio, including a proportion of loans securing the Sapphire portfolio.
The original €600m senior loan securing the portfolio was heavily syndicated. Davidson Kempner, the US hedge fund, acquired around €370m of gross liabilities – including loans and mark-to-market swap liabilities – from Ulster Bank’s €715m Project Button loan portfolio.
The Project Button Cosgrave position was part of a wider banking syndicate, with a further circa €126m stake owned by Blackstone, which had acquired the loans from Permanent TSB, while around €54m was also owned by NAMA, ING Bank and ACC.
Cosgrave has completed a discounted payoff with all creditors allowing the closure of Green REIT’s acquisition.
The Sapphire portfolio – rising to €385.3m inclusive of acquisition costs – is comprised of the 247,693 sq ft George’s Quay Blocks A, E & F, the 98,968 sq ft George’s Court and the 302,128 sq ft Westend Retail Park in Blanchardstown, Dublin 15. The net initial yield was 6%.
Main office tenants include Pioneer Investments, Invesco, Northern Trust, GAM Fund Management and RBC Dexia. Main retail tenants include Next, Heatons, New Look, Lidl, Gap and Nike.
In addition, Green REIT has acquired 13-17 Dawson Street in Dublin 2 from joint receivers on behalf of NAMA for €24.2m, including acquisition costs, in what is considered a prime redevelopment opportunity. The acquisition will be funded with €10m in equity and the balance in debt.
The building, with substantial frontage onto both Dawson Street and Molesworth Street, has the potential to accommodate a substantial redevelopment scheme which doubles the existing lettable area, subject to planning permission.
The two acquisitions take Green REIT’s total deployed capital to €774m over 24 properties, reflecting €52.8m per annum, representing an investment income yield of 7.1% on the portfolio.
Green REIT has acquired a total of 24 high quality assets with a current occupancy rate of 92%. Following these acquisitions 96% of the company’s properties, by value, are in Dublin.