Eircom's Superannuation Fund has capitalised on the shortage of commercial investments by getting top prices for office blocks in Dublin and Cork and a retail building in Dublin's Henry Street. A private investor paid £10 million for Canada Life House, a modern office building in Blackrock, Co Dublin, in a deal that will give him a yield of just over 5 per cent. Another businessman bought the Eircom Building, at Lapp's Quay in Cork, for £3.3 million, a price that will show a return of 5 per cent.
The most remarkable result, however, was the £4 million paid by Canada Life for 1 Henry Street - a figure that sets a new yield benchmark of 3.93 per cent for the street. The last retail investment sold on Henry Street, Hickeys Fabrics, showed a return of slightly over 5.6 per cent for Norwich Union when it changed hands in July, 1996. The much improved level of trading on the street in the meantime may account for this week's record yield.
The Eircom fund also did considerably better by buying the lease before putting the building on the market and reletting it to jewellers H Samuel at an initial rent of £170,000.
Agents Druker Fanning and Partners, advisers to the Eircom fund, said yesterday they were not in a position to confirm either the selling prices or the identity of the new owners. The sale of the three investments will allow the Eircom fund to rebalance its portfolio which has managed funds of over £1.7 billion.
The sale of the two office blocks to private investors underlines the increasing role played by business people in the commercial property market. It is understood that there was intense competition for the Blackrock building, which is rented at £553,113 per annum. The selling price suggests that the new owner is obviously banking on getting a substantial increase in rents when the next review takes place in over four years. Canada Life occupies the 26,925 sq ft block on a 30-year lease from 1995.
The Eircom building in Cork is located in the heart of the business district, close to the South Mall and directly opposite the City Hall.
The six-storey over ground floor block has a floor area of 25,668 sq ft and dates from 1980. Eircom plc holds a 35 year lease from 1981 subject to five-yearly upwards-only rent reviews.
The ground floor showroom is used as a tele-sales centre. The current rent of £175,000 works out at £6.80 per sq ft and will inevitably show a significant increase when it is reviewed next May.
