A private investor has paid close to €17 million – €5.5 million over the guide price – for a substantial under-rented office building with considerable investment potential just off Dublin’s O’Connell Street.
The strong-selling price achieved by Knight Frank for Telephone House on Marlborough Street was driven by strong competition between a number of investment companies interested in converting the 1970s block into a hotel.
Close by, the former Findlater House on O’Connell Street, sold in 2013 for €6.2 million, has been converted into a 198-bedroom Holiday Inn Express which is due to open shortly.
Three more hotels are also in the pipeline for the O'Connell Street area – a 107-bedroom property planned for Moores Lane, a 33-bed budget hotel for the former Guineys shop site on Talbot Street and a budget hotel behind Clerys at Sackville Place.
Meanwhile, the new owners of the 323-bedroom Gresham Hotel, due to be named shortly, are expected to indicate whether they are also interested in buying in the adjoining DIT College in Cathal Brugha Street.
Telephone House had a long association with Eircom and is now used as a call centre by global conglomerate HCL which is contracted to provide customer and technical support services to the newly named company Eir.
The nine-storey over part basement office building with its old-fashioned reinforced concrete frame was owned for many years by the businessman Ben Dunne.
It was bought about six years ago by Alburn, a company controlled by solicitor and property developer Noel Smyth. The 7,154sq m (80,773sq ft) block is let to HCL on a 10-year lease at a rent of €968,084, equating to a low base of €10.46 per sq ft. Eircom had been paying rent of €27 per sq ft until its lease ran out. HCL also pays €2,000 for each of the 61 car parking spaces on site. Even with the low rent agreed in the latest letting, the new owner can expect a return of close to 5.5 per cent.
The 10-year lease from 2015 provides for a review at the end of the fifth year. HCL is entitled to assign or sub-let the building or part of it to Eir on condition it provides a guarantee.
Two telecommunications masts on the roof of the building are producing an additional €16,000 per annum.
Apart from the new hotels in the pipeline, O'Connell Street is also likely to benefit from the redevelopment of the Carlton Cinema site opposite the Gresham as well as Clerys department store.
The range of new developments planned for the O’Connell Street area may well have been triggered by the ongoing construction of the Luas Cross City line which will link the southside Green Line with the northside Red Line.
