InvestmentFunds:Friends First has re-opened its Irish Property Fund following the acquisition of seven bank branches from Bank of Ireland for €60 million.
The seven newly acquired premises are in prime locations throughout Ireland and are all let to Bank of Ireland on 25-year leases with five yearly rent reviews.
The branches occupy prominent locations with good rental growth prospects and have a current net yield of approximately 3.7 per cent. The properties include three in Dublin (Blackrock, Phibsborough and O'Connell Street), Cork (South Mall), Athlone (Church Street), Dundalk (Clanbrassil Street) and Newbridge (Main Street).
The revised rent will either go up in line with the Consumer Price Index (CPI) or in line with the open market rent if this proves to be higher than the CPI.
An open-ended fund, the Irish Property Fund was temporarily closed to new investors after it became over-subscribed last year. The fund had realised annual gains of 18.72 per cent in the 10-year period to April 2006 for a total performance of 456 per cent over the period (MoneyMate).
The Irish Property Fund is a diversified commercial fund with approximately 45 per cent in office, 43 per cent in retail, 7 per cent in industrial and 5 per cent in cash. In addition to the seven Bank of Ireland branches, there are 17 commercial properties in the portfolio, including well known names such as fashion retailer Oasis in St Stephen's Green, Dublin, Laura Ashley in Grafton Street, Dublin, and the Eagle Star head office in Blackrock, Co Dublin.
According to Eamonn Twomey, marketing director, Friends First, demand for property investments will continue unabated in 2007 despite the recent increases in interest rates.
"Going forward, investors are cognisant that the yield compression witnessed over the previous three to five-year period is nearing the end of its cycle. A gradual easing in total returns driven by rental growth will be the order of the day in 2007," says Twomey.
Friends First has achieved the best performing commercial property fund over a five-year and 10-year timeframe, according to MoneyMate (February 2007). The performance has seen Friends First independently voted the MoneyMate/Investor Magazine "Best Property Investment Company of the Year" in 2005, 2006 and 2007.
The Irish Property Fund is managed by F&C Management Ireland, which has over €1.2 billion of property assets under management. The fund management charge is 0.75 per cent.
