Irish Life has surprised the Dublin investment market by buying a newly completed restaurant, cafe and office development at Percy Place for less than €8 million. Like other busy property funds, Irish Life seldom dabbles in low value investments, concentrating instead on properties at the top end of the market. It has spent more than €700 million on office and retail investments over the past three years.
In one deal alone last summer, it paid €154 million for McDonalds fast food outlet on Grafton Street and eight other high street retail outlets as well as five office blocks. The sudden switch to a low value product was to facilitate one of the small funds under its control.
The almost €8 million acquisition has an added significance in that it underlines the slowdown taking place after five years of non-stop distressed sales. From now on much of the market is expected to be dominated by the resale of secondary properties bought in large portfolios or as part of loan books.
The decision to buy in the Percy Place investment was also undoubtedly influenced by its primary location and high quality build as well as the strength of the covenants. The overall rent roll of €450,000 will show a net return of around 5.5 per cent for the Irish Life fund.
The attractive infill development at the junction of Haddington Road and Percy Place, just off Baggot Street Bridge, was funded by the UK's Development Securities –since renamed U+I– and Oakmount, a company controlled by leading property developer Paddy McKillen.
The one-quarter acre former coal yard backing on to the Grand Canal was sold during the boom for €13 million and slipped in value to €2.5 million after the crash. The two companies opted to proceed with the mixed use planning permission obtained by the previous owner and lost no time in embarking on the four-storey development with 16 car parking spaces at basement level.
The development also included 12 top of the range apartments, 11 of which have already been sold to young professionals and older couples downsizing. Sherry FitzGerald is quoting €1,275,000 for the last remaining unit, a two-bedroom duplex extending to 128 sq m (1,378 s q ft).
The three floors of offices with floor-to-ceiling glazing to the front of the development and an overall floor area of 426 s q m (4,595 sq ft) have been let at €538 per sq m (€50 per sq ft) – the widely accepted benchmark for newly completed office developments in the city centre.
The newly launched Angelina’s restaurant with a floor area of 328 sq m (3,540 s q ft)and adjoining café looking directly across the canal are trading exceptionally well under the direction of a bar, hotel and restaurant company controlled by Paddy McKillen, junior.
