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Archive for August 17th, 2011

Last week, NAMA Top 10 developer Gerry Gannon offered a reward of €5,000 for information on a spate of arson attacks on three of his properties over the last four months that the Evening Herald reported had cost a total of €5m in damage. The three buildings targeted were Newton House, Balheary Road in Swords, Co Dublin on 5th August 2011 and Knockdromin House, in Beau, Rush, Co Dublin on 1st July 2011 (pictured here, before and after the fire) and of course Belcamp College in Balgriffin, Co Dublin on 14th April 2011 (pictured here after the fire). It is understood that the Belcamp College site is under NAMA’s control, it is unclear if either of the other two properties are controlled by NAMA.

Today Andrew Carey at the Limerick Post reports that the Opera shopping centre site in Limerick suffered smoke damage last night after arsonists used materiel on the site to start a fire. The fire was brought under control by the Fire Brigade but the Post claims the building suffered “extensive” smoke damage. The Opera site is owned by a company controlled by NAMA Top 30 developers Jerry O’Reilly, David Courtney and Terence Sweeney.

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Designed and constructed by the P Elliot group (now in receivership – click here for that company’s description of the project) for the Riverside II Partnership, a consortium that is understood to include the Kelly, McCormack, Flynn and Elliot families, sources claim that a landmark building on the southside of the Liffey in south Docklands is to be put on the market through Knight Frank with a price tag of €35m (€396 psf).

The Riverside II office block, a 5-year old, 8,200 sq metre (88,232 sq ft ) building is currently home to a number of tenants including Beauchamps solicitors and BNY Mellon. It is understood the annual rent collectible stands at €3.2m and that leases have up to 10 years to run. It is further understood that the building is subject to a loan from Bank of Scotland (Ireland), now part of the Lloyds banking group. BOS(I) exited the Irish market in 2010 and transferred much of its loan portfolio to new loan workout company, Certus. Last week, it was reported by Property Week that Lloyds had entered into a €1bn tie-up with Stephen Vernon’s Green Property group.

The capital’s office market is in deep depression at present. Looking back now, it is indeed surprising that Google took the plunge and bought the 210,000 sq ft Montevetro building earlier this year. The building, just around the corner from Riverside II was reportedly purchased by the search engine giant for €99.9m (€476 psf). Google also bought Gasworks House for “slightly over €100m” (€115m according to some sources). But aside from these two transactions, the office sales market has been deathly quiet. There was a €9m sale and leaseback to Ericsson in Clonskeagh,Dublin and there might have been a few smaller transactions. But that’s it, and we’re already 2/3rds of the way through the year.

The absence of credit, lack of confidence in the economy generally (and specifically concern over the IMF bailout) and the dilly-dallying by Minister Shatter over Upward Only Rent Reviews (UORRs) are all blamed for the sorry state of the market. NAMA’s plans for its vast portfolio are also still unclear – there is a target to reduce NAMA’s €30bn debt by 25% by 2013, a maximum of 28 months hence, and it is unclear how this will reflect in the Irish office market – will NAMA concentrate on UK disposals? will NAMA concentrate its efforts on Irish residential with its innovative mortgage product? On Monday, it was exclusively reported on here that NAMA had sold a 7-acre site with an office building in Clonskeagh, Dublin for €8m which had been purchased for €25m in 2003, so it seems NAMA is prepared to market office property here and take losses (by reference to original values and possibly the par value of the loans, and indeed perhaps by reference to what NAMA paid for the loans). But generally there is a lack of clarity in NAMA’s intentions. Irish commercial property prices have fallen by 7% in the first two quarters of 2011 according to Jones Lang LaSalle (and reflected in rival SCSI/IPD’s index) though industry sources confirm that the decline may in part reflect the uncertainty about UORRs.

Against this background, the sale of Riverside II with a price tag of €35m will be a challenge.

Neither Knight Frank or selected parties to the Riverside II Partnership had commented on the Riverside II sale at time of writing.

UPDATE: 17th August, 2011. Knight Frank has confirmed that it has been instructed by the Riverside II Partnership (not the bank)  to dispose of the Riverside II building on Sir John Rogerson’s Quay. Knight Frank is currently preparing an Information Memorandum . The property will be offered for sale to a small number of pre-qualified investors who have signed confidentiality agreements.

UPDATE: 9th May, 2012. The building is now reportedly sold to an un-named German fund, though rumours abound that it is Pramerica.  The reported sale price is €35.5m representing an intial yield of 8.6%. The Governments messing-about with Upward Only Rent Review changes to pre-Feb 2010 leases is blamed in part for the nine month delay in finding a buyer.

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