PIMCO appoints agents to sell ‘mini’ government-backed Ulysses portfolio for €28.5m

PIMCO and Tetrarch Capital have appointed JLL and CBRE to sell four properties from their 25-strong Ulysses portfolio, comprised of Dublin city centre office buildings secured by long-term government income.

PIMCO logoJLL and CBRE have been jointly on the mini portfolio secondary sale – dubbed the Harp portfolio named after the insignia of the Irish government which is the dominant portfolio tenant –and are guiding in excess of €28.5m.

A sale at the guide price would imply an unleveraged net initial yield of 7.95%, based on an annual income of €2.37m, and a capital value per sq ft of €327 based off a total floor area of approximately 87,110 sq ft.  The weighted unexpired lease term is approximately 8.5 years

The Harp portfolio is comprised of:

  • 48-49 North Brunswick Street, Dublin 7. The 18, 366 sq ft office block is single–let to Legal Aid Board which expires in 31 January 2026. Current annual income is circa €685,467.
  • 31-35 Bow Street, Dublin 7. The 11,385 sq ft office block is entirely let to government department, which expires 15 November 2025. Current annual income is circa €450,000.
  • 21-24 Capel Street, Dublin 1. The 36,779 sq ft office and retail block is 89% let to The Garda Ombudsman Commission government department, with a self-contained Spar on the ground floor. The Garda Ombudsman Commission, which pays €982,376 per annum, has a break clause on 10 April 2017. Total annual income is €1.1m with a WAULT of 5.19 years.
  • 16-22 Green Street, Dublin 7. The Irish Human Rights and Equality Commission have just let three of the six floors on a 20-year lease with a tenant break option in year 10. In addition, the penthouse of this building is the only vacant floor within the entire portfolio but PIMCO and Brehon Capital are confident that this will be let in advance of a sale being completed.

Approximately 98% of the income is generated from government tenants or government backed tenants providing secure long term income for investors.

JLL and CBRE said in a joint statement: “With long term Irish government bonds currently trading at less than 1.3% per annum, Harp Portfolio offers investors a significantly higher return potential. 

“It is likely that investors would be able to secure attractive debt terms on the portfolio, which will enhance the returns and could provide investors with immediate double digit return depending on the loan to value ratio they choose to apply.” 

PIMCO and Brehon Capital bought the Ulysses portfolio in autumn 2013 for €152.5m, financed with a €100m five-year loan from Morgan Stanley priced at sub 400 basis points over Euribor in January 2014. In the subsequent near 18 months, loan margins have compressed significantly. 

Brehon Capital split into two last year, with Kevin McGillycuddy focusing more on development opportunities under the Brehon name, and Tetrarch Capital taking over the asset management and investment portfolio under Michael McElligott. 

The 546,511 sq ft Ulysses portfolio is the former Irish property empire assembled by developer Liam Carroll’s Zoe Developments, originally with financing from Lloyds Banking Group subsidiary, Bank of Scotland (Ireland).

At the peak of the Irish commercial property market in 2007, the Ulysses portfolio was valued at €2bn.

Lloyds put the portfolio into receivership and appointed Green Property, the real estate investment management firm which now exclusively invests for the Green REIT, in August 2011 to asset manage the assets.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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