As NAMA gets stuck into its asset management phase, we should be coming across far more individual properties where the Agency is deploying one of its five strategies (1) sell (2) rent (3) develop (4) mothball and (5) demolish. Of course, these five strategies will be refined with third party risk-financing and the “sell” might be of the actual loan or the underlying property.
You can’t really improve on Jack Fagan’s report in today’s Irish Times (assuming all the facts and claims are correct). He reports that part of Bernard McNamara’s former portfolio on Grafton Street is being developed, specifically two adjoining buildings at 57/58 Grafton Street are being merged so as to give a flagship 8,000 sq ft footplate. There will be two upper floors of offices as well. The cost of the development is put at €1.5m.
What about the economics of it? Apparently Bernard bought the two buildings as part of his grand “Monopoly style” design to own a new street in central Dublin which would be built between Grafton Street west to South William Street. The purchase price is reported to have been €25m. It’s not known what NAMA paid for the loan, but it had receivers, RSM Farrell Grant Sparks appointed as receivers.
It seems that NAMA might be reacting to the paucity of larger footplate outlets on Grafton Street – if you’ve walked down that street recently, it ain’t Bond Street with newsagents, juicebars, sandwich shops, mobile phone shops, fast food outlets, gift shops and other low-rent outlets. There are at least two vacant units also, Korky’s old store at 47 Grafton Street and an adjoining unit. The thinking behind NAMA’s development is that a large footplate store might attract a flagship retail outlet, Boots is mentioned.
The enlarged shop should rent for €750,000 or just under €100 psf reports Jack Fagan and Savills will be marketing the property. So the strategy is to develop and rent (and hope capital values recover to enable a sale later on).
NAMA has committed to investing €2bn in its properties in the four years up to 2016. This is on top of other working capital advances. So far, we know about NAMA funding the Bailey brothers’ Charlestown shopping centre in Finglas, the Cosgraves’ Dun Laoghaire Golf Club, but we are all waiting to hear if NAMA will take the plunge and commit to develop a 100,000 sq ft plus office in the city centre.
UPDATE: 3rd April, 2013. News this afternoon via the Daily Business Post that Savills is offering the HMV store on Grafton Street for rent at €1m per annum. HMV went into receivership in January 2013, and the 19,000 sq ft premises is said to be the biggest retail footplate presently available on Grafton Street. The rent works out at €53 psf and there was talk recently that Hilco, the Dublin based company that took over the remnants of HMV would try to renegotiate the rent at €700-800,000 (or €37-€42 psf).