A SUBSTANTIAL OFFICE investment going for sale today in Dublin 2 will lead to the dissolution of a partnership between the property pension fund IPUT and developer Bernard McNamara whose main property businesses are in receivership.

Savills are quoting a guide price of €70 million for Bishop’s Square, an 11-year-old office development with access on to Kevin Street and Bishop Street, which will give the next owner a net initial yield of 9.2 per cent.

IPUT paid €45 million for a 50 per cent stake in the 14,263sq m (153,539sq ft) office complex in 2003 and has now agreed an exit strategy with Declan McDonald of PwC who was appointed receiver over the remaining shareholding by Ulster Bank.

It is generally expected that IPUT will use its share of the sale to acquire or develop a top-of-the-market office block capable of accommodating the expanding space requirements of some of its long-term tenants including solicitors Arthur Cox and William Fry.

Savills is confident of finding a buyer for the six-storey building, not only because of its distinctive art deco fit-out but with security of income crucial in the present business climate, it can bank on 70 per cent of the rent roll from State agencies over the next nine years. This is expected to prove a strong selling point when the marketing campaign gets under way today.

The current rents from the offices and 64 basement car parking spaces is €6,704,707

In addition to the OPW, the tenants include State Street, the New York bank which has relocated to the south Dublin docklands. The bank will continue to pay a rent of €1,484,000 for 3,058sq m (32,916sq ft) until 2016. Tourism Ireland’s lease of 1,152sq m (12,400sq ft) will continue until September, 2022.

Another tenant, News International Ltd, publishers of the Sunday Times and the the Sun, recently renewed its lease at €296 per sq m (€27.50 per sq ft).

One of the features of Bishop’s Square is its landscaped atrium which runs from the ground floor to the sixth level and enhances the flow of light through much of the building.

Typical floor plates extend to 3,000sq m though the penthouse levels vary between 1,100 and 1,500sq m. Double service cores within the building allow maximum flexibility for multiple occupational requirements.

Fergus O’Farrell of Savills said there had been an increased demand in recent weeks from local and overseas buyers for quality office assets.

Given the size of Bishop’s Square as well as the strength of the covenants and the length of rental income guaranteed, he believed the investment would prove highly attractive to investors.

With the vacancy rates for Grade A offices in Dublin 2 now down to 4.6 per cent, these investments were seen as having short-term recovery potential because of the diminishing stock levels.

Bishop’s Square is located beside the large DIT campus on Aungier Street which generates a huge level of activity in the area.