Goldman to crystallise Spencer Dock profit as Project Trinity second round bidders emerge and BoI sells €162m National Portfolio

Goldman Sachs, NAMA and Hines are selling their combined ownership of Spencer Dock’s Block R in the North Docklands with a guide price of €90m, amid a raft of live Irish direct property sales this summer.

Goldman Sachs acquired a €52m tranche of the Spencer Dock debt, which reflects about 60% of the total, through its IBRC Project Stone NPL acquisition at an undisclosed discount in April 2014.

The balance of the ownership of Block R is owned by NAMA and Hines, with the developer acquiring an interest as part of a wider interest acquired in Spencer Dock’s 50-acre former railway yard late last year, previously owned by Treasury Holdings.

CBRE and Savills have jointly been mandated by KPMG and Mazards, on bealf of the owner consortium, to sell the 127,000 sq ft prime office block for above €90m would reflect a 5.18% net initial yield and a capital value of €708 per sq ft.

Goldman its expected to be made whole on its discounted purchase of the €52m debt trance acquisition from IBRC.

Since Goldman’s acquisition of the majority stake in Spencer Dock’s Block R, the value of the building has risen through improving the occupancy from around 50% to its current almost fully let status, after securing The Commissioners of Public Works in Ireland on a 20-year lease with a break option in year 12.

The remaining tenants include The Central Bank and Nationwide Building Society, with the office block generating a combined rental income of €4.8m per annum.

Block R’s WAULT is 9.93 years, with the asset offering strong reversionary potential as more than 40% of the office accommodation is currently passing at a rent of €30 per sq ft. The ground floor three retail units are currently vacant.

The almost fully stabilised prime office block is expected to draw interest from Irish and German institutional investors, potentially including Irish Life, I-PUT, Union Investments, GLL Real Estate Partners and Deka Immobilien Investment.

First round bids due late July.

In a statement, Savills’ Fergus O’Farrell said: “Given the high profile location, security of long term income from state bodies in conjunction with continued investor appetite for Grade A office buildings we anticipate a strong level of interest in the property”.

CBRE’s Colm Luddy added: “The quality of the development will mean that Block R will appeal to both international and Irish institutional investors and this opportunity is well positioned to benefit from rental growth in the office market.”

Five-strong shortlist emerges on Ulster Bank and Rabobank’s Project Trinity

Five bidders have progressed through to the second round of Project Trinity, which is the sale of the company which owns the Ballsbridge Hotel and Clyde Court Hotel which are part of a 6.8 acres freehold site, which was acquired by developer Sean Dunne for €380m back in 2005.

Ulster Bank and Rabobank, which own the company, have narrowed the second round shortlist to Joe O’Reilly’s Chartered Land, Cairn Homes, London & Regional, Capstone, Colony Capital with Patrick McKillen, CoStar News understands.

First round indicative bids for the five finalists came in between €145m and €155m, based on initial guide price of around €150m. Binding bids have been called for mid-July, which could see Project Trinity trade for above €160m.

The site has a 10-year grant of planning permission to construct 490 luxurious apartments over 1.5m sq ft and a 152-bed hotel.

The existing hotels, the 400-bed four-star Ballsbridge Hotel (formerly Jury’s Hotel Ballsbridge) and the 185-bed Clyde Court Hotel (formerly The Berkeley Court Hotel) are currently let to Dalata Hotel Group subsidiary, Tulane Business Management Limited.

The leases expire on 1 April 2018, with a break options available on 31 December 2015 and 30 September 2016. 

Eastdil Secured and Savills have been jointly mandated to run the Project Trinity sales process.

BoI’s €162m retail park National Portfolio offered in three lots

Bank of Ireland has brought to market a 1.1m sq ft five-strong retail parks portfolio seeking offers above €162m, which would equate to 7.2% net initial yield.

Savills and JLL have been jointly instructed by receivers KPMG and Mazards, for different retails parks, to sell the portfolio, dubbed the National Portfolio, on behalf of Bank of Ireland.

The National Portfolio comprises:

  • Lot 1: the 195,000 sq ft Nutgrove Retail Park in Rathfarnham, South Dublin, carries a guide price in excess of €62m, which equates to an initial yield of approximately 6.33%.
  • Lot 2: the 380,000 sq ft Letterkenny Retail Park, the 260,000 sq ft Sligo Retail Park, the 170,000 sq ft Tullamore Retail Park and the 140,000 sq ft Deerpark Shopping Park in Killarney. The guide price for the four regional schemes is excess of €100m which equates to a net initial yield of approximately 7.78%.

Bidders can submit offers for either lot or the entire portfolio. The current annual gross income across the entire portfolio is approximately €12.2m per annum and offers an attractive WAULT of approximately 10 years.

Simon Coyle of Mazars is the receiver for Nutgrove Retail Park and Deerpark Shopping Park.

Nutgrove, around 7 km south of Dublin city centre and includes 57,000 sq ft of office and leisure facilities, is currently producing a total rent of approximately €4.1m per annum with 76% of this income secured by Homebase, Harvey Norman and Aldi. The scheme’s retail units are fully let, with a 13.9 years WAULT.

Deerpark Shopping Park is anchored by Homebase, Marks & Spencer and Arcadia Group and is adjacent to Tesco Superstore and Aldi. Deerpark’s annual rent is €1.55m and its WAULT is approximately 4.4 years.

Kieran Wallace and Patrick Horkan of KMPG were appointed joint receivers of Letterkenny Retail Park, Sligo Retail Park and Tullamore Retail Park back in March 2012 after Bank of Ireland took control of the three provincial retail parks.

The enforcement just over three years ago was in an effort to recover around €100m in loans to developers Newbay Doherty Properties, a consortium of businessmen including the Northern Ireland developers William Moffett and Anson Logue and Letterkenny-based developer Patrick Doherty.

Letterkenny, the largest of the retail parks within the National Portfolio with 38 units, with tenants including H&M, New Look, River Island, Menarys, TK Maxx, Marks & Spencer, Homebase, Boots, Argos, Halfords and Smyths. The annual rent roll is €3.06m per annum which is set to increase on expiry of H&M rent-free period. The WAULT is above 9 years. 

Sligo Retail Park comprises 15 retail warehouse units and a cluster of three food units.  The scheme is anchored by Homebase, with over 9.5 years unexpired lease, as well as Halfords, Homestore & More, Currys, PC World, Harry Corry, Smyths Toys and Mc Donalds. The total current rent is €2.05m and a WAULT of eight years. 

Tullamore Retail Park is bookended by Heatons Department Store and Woodies with seven retail units on the linking parade and a standalone Burger King restaurant in the car park. Other tenants include Argos, DID Electrical, Minogue Furniture and Harry Corry.  Within the car park there is also a Tesco Petrol Filling Station.

The total rent is €1.47m per annum with an overall WAULT of 10.7 years. 

The National Portfolio’s split into two lots reflects the assets respective profile: Nutgrove is the institutional, stabilised asset, while the four retail parks in lot 2 all carry varying degrees of value add opportunities.

Lot 1 bidders are expected emerge from core investors, including the Irish REITs, the Irish and German institutional investors. Interest in the entire five-strong portfolio is expected from platform builders, such as Davidson Kempner, Marathon Asset Management and Varde Partners.

In addition Burlington Real Estate, ran by the former senior management team of Treasury Holdings, and Tony Leonard and Patrick McKillen’ Clarendon Properties could bid, possibly with Development Securities following their acquisition of Nutgrove Retail Centre and Beacon South Quarter for €12.8m two weeks ago.

In a statement, Savills’ Domhnaill O’Sullivan said: “As a retail park portfolio, there are significant synergies in terms of dealing with existing tenants across multiple schemes and more importantly new tenants looking to access the market.”

JLL’s John Moran added: “The scale of this sale gives investors scope to establish a significant retail park platform in Ireland and to benefit from the rental growth prospects we anticipate in the retail market.”

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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