A NEW OFFICE block in the Dublin docklands has been acquired by an overseas fund anxious to avail of attractive returns and a reduction in the stamp duty from 6 to 2 per cent.
A German fund last week exchanged legal documents and agreed to pay €35.5 million for the five-year-old Riverside II Block at Sir John Rogerson’s Quay in the south docklands in a deal that will give it an initial yield of 8.6 per cent – the highest return so far in the city for a modern building. It is currently producing a rent roll of €3,196,000 per annum. The change in the stamp duty has meant that the purchaser will now pay €700,000 instead of the original bill of €2.1 million.
Last month, US fund Northwood Investments settled for a yield of 7.25 per cent when it bought the newly developed office block One Warraington Place at Mount Street Bridge for €27 million.
Riverside II has taken the best part of nine months to shift largely because of the uncertain economic conditions in the country and the threat by the Government – later dropped – to abolish upwards-only rent reviews on all existing commercial property leases. Ciara Horgan of Knight Frank is handling the sale while Fergus O’Farrell of Savills is acting for the German fund.
Though commercial property values in Ireland have fallen by more than 60 per cent since the peak in the third quarter of 2007, there have been relatively few distressed sales so far of prime properties because of the uncertainty about the take up of investments. The sale of Riverside II may prompt Nama and some of the banks to speed up the sale of more of the prime properties in trouble.
Riverside II was valued at more than €60 million in 2006 and was jointly owned by the Elliott, Kelly, Flynn and McCormack families who have all taken a major hit by the collapse of the property market. The 1.1-acre site for the building, bought in 2004 for €25 million, also included space for 124 apartments which were built and sold. Funding for the office block was provided by Bank of Scotland (Ireland), now part of the Lloyds Banking Group.
The seven-storey block fronts directly on to the river Liffey and extends to 6,784 sq m (73,022 sq ft). There are 412 car parking spaces in the basement. The current rent of €452 per sq m (€42 per sq ft) is somewhat higher than the going rate for similar accommodation in the docklands but with no new buildings under construction and available space in new blocks quickly running out, rents are expected to pick up again later this year.
