ONE OF THE most prestigious office developments completed in Dublin in recent years – at the junction of Lower Mount Street and Warrington Place in the south inner city – is due to be offered for sale on the international market.
Joint agents Deirdre Hayes of HT Meagher O’Reilly and Ann Hargaden of Lisney are expected to quote a guide price of €28 million for the investment at One Warrington Place, which will show a net initial yield of 7 per cent. One expert said the investment would have fetched around €75 million had it been occupied and offered for sale at the going yield of 4 per cent in 2006 and 2007.
The block is being sold following the transfer of the Anglo Irish Bank development loan to Nama by the promoter David Arnold. Arnold has considerable property interests in Ireland and the UK, much of it acquired at the height of both markets by D2 Private, an investment company he set up with Deirdre Foley.
The sale is seen as the first important test of the level of overseas interest in distressed Irish commercial properties and, to get the market moving, Nama is expected to offer vendor funding of up to 70 per cent of the loan to value at a premium of 2.5 per cent above the standard bank rate.
Unlike most other properties on the market, Warrington Place will not be affected by the planned legislative changes in retrospective rent reviews. The lease was drafted after February 2010, when landlord and tenant legislation was changed for all new leases, effectively banning upwards-only rent reviews from that date.
The rent roll in this case was agreed at €2,138,856 – equating to a low base rent of €392 per sq m (€36.50 per sq ft) for a building of this quality. The 25-year lease on the 5,211sq m (56,103 sq ft) block provides for five yearly rent reviews and includes a break clause in year 10. Thirty-one basement car parking spaces are being rented at two rates, €1,500 and €3,500 per annum.
The eight-storey over-basement block had been expected to set a record for rents in the city when it was launched early in 2008. The highest rent then was €700 per sq m (€65 per sq ft) for a suite at Garrett Kelleher’s redeveloped block at 75 St Stephen’s Green.
But rents in Warrington Place fell well short of a record because of a slowdown in new lettings and fears for the economy.
Arnold was nevertheless happy to settle for a strong covenant in Bord Gáis, which is 97 per cent State-owned. The company had a turnover of more than €1.5 billion last year and profits before tax of €120 million.
One Warrington Place, designed by architects Henry J Lyons, has already acquired a landmark status overlooking the Grand Canal along one of the busiest entrances to the city. The glass facade includes a large, curved drum feature to add a focal point at this important junction.
The block has a B1 energy rating which means that its running costs are almost half those of a standard third-generation building.
Air conditioning alone will show a saving of 40 per cent after installation of a solar deterrent system.
Water usage has also been reduced by 20 per cent due to a new rainwater harvesting system.
