Saturday 1 October 2016

Autumn auction property offers yields of up to 40pc

Donal Buckley

Published 08/09/2016 | 02:30

Hainault House has a guide price range of €1.7m to €1.9m
Hainault House has a guide price range of €1.7m to €1.9m
Apt 11, 43 East Essex Street
Block F Athy Business Campus
Coral House

Office properties with gross yields ranging between 8pc and 40pc will be among the lots offered for sale at two auctions to be held this month.

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The largest of the two will be the Allsop auction, where the 169 lots comprising 56 commercial lots with combined guide prices of €12.59m and 114 residential lots with €15.2m in guides. Allsop's auction will take place on September 28 in the RDS Dublin and its lots include a Temple Bar apartment developed by Wexford TD Mick Wallace and where the receiver is making a third attempt to sell it.

Also this month, Cushman & Wakefield and Sherry FitzGerald (CW and SF) will hold an auction on September 22 at Leopardstown Racecourse which will offer 29 lots with a combined value of €5.8m.

The 40pc yield applies to one of the SF office lots which is occupied by Revenue Commissioner's staff and let to the Government's main property manager, the OPW, which is paying a rent of €230,000 a year. Located at Block F, Units 4-7, Athy Business Campus, in Co. Kildare, it has a guide price of €550,000, suggesting that the purchaser might recover the purchase price within less than three years. Originally comprising four warehouses, the OPW converted it into 13,487 sq ft of two-storey modern offices.

The OPW's current lease has expired and it had agreed to a new 10-year lease at a fixed rent of €90,000 a year, but as that lease has not been signed it will be up to the purchaser to finalise. If the proposed new lease was acceptable to both parties then the new owner would benefit from a 16.2pc yield. That is based on the guide price, which was calculated on a vacant capital price of €40 per sq ft.

The CW and SF auction also includes two Dublin industrial properties with suggested gross yields of around 10pc.

Unit 33 Robinhood Industrial Estate, Dublin 12, is a semi-detached warehouse which has been extended to 23,336 sq ft and divided into three principal areas and it has a €450,000 guide price. The main warehouse extending to 9,741 sq ft is let to Long Thanh To trading as China Market at a rent of €48,000, but the lease has expired. Two other units in the property are vacant.

Also in Dublin 12, an investment property at 113 Elm Road, Western Park Industrial Estate, has a €230,000 guide price. It is let to two tenants who pay a combined rent of €24,000, suggesting a gross 10.4pc initial yield.

A mixed retail and office investment property in Castlerea, Co. Roscommon, has a €120,000 AMV. Known as The Old Mill, it comprises three retail units which are occupied, two which are vacant and two vacant office units.

CW and SF's auction also includes four regional housing developments with completed and uncompleted units, as well as a number of retail, mixed use and residential properties.

The advantage of tenancies is reflected in the price differences between two Tallaght office properties in the Allsop auction. Hainault House, Belgard Road, Tallaght, Dublin 24, has a guide price range of €1.7m to €1.9m, suggesting a capital cost of about €110 per sq ft. This standalone three-storey premises extends to 16,390 sq ft.

Current rent reserved from two tenants which occupy two floors amounts to €147,090 per year, suggesting a gross initial yield of 8.16pc. However, with vacant possession of the 5,575 sq ft first floor, it has potential to increase the rental income. In contrast, the €1.3m to €1.4m price tag for the vacant Coral House, Airton Road, Tallaght, suggests a capital cost of about €52 per sq ft. While also a three-storey premises, it is semi-detached and extends to 26,000 sq ft.

More than a third of Allsop's commercial catalogue is accounted for by retail properties, some of which are generating attractive yields. For instance, 61/62 High Street, Kilkenny city, has seven tenancies and total rent reserved of €47,700 a year with vacant possession of two units. It has a guide price range of €470,000 to €530,000, suggesting potential for a gross yield of around 10pc when fully let. In Athy, Co. Kildare, there are two retail investments, one of which is let to Boyle Bookmakers for €21,000 per annum, rising to €30,000 per annum once a new lease is executed. Its guide ranged between €350,000 and €400,000.

In Dublin, a vacant ground floor retail unit on North King Street, in a corner position overlooking Smithfield Civic Square, carries a reserve range of €600,000 to €650,000.

Five public houses are also going under the hammer, of which the most valuable is the former Páidí Ógs in Mulhuddart, Dublin 15, which has a €625,000 to €675,000 guide. The Mercantile Group, which is headed by Frank Gleeson and owns a number of Dublin pubs, has submitted Páidí Ógs for auction only a few months after Allsop's sister company QRE quoted €875,000 for a private treaty sale. Its premises extends to 16,852 sq ft and includes a retail unit. Sitting on an acre which is zoned local centre and high amenity, auctioneer Richard O'Neill says it has potential for a range of uses.

A former Dublin pub, the Kings Inn on Bolton Street, Dublin, has a €350,000 to €450,000 guide.

The receiver to some Temple Bar apartments developed by Wexford TD Mick Wallace is making a third attempt to auction the last one on his books at a reduced asking price. Located at 43 East Essex Street, Temple Bar, Dublin 2, over the Communist Party of Ireland's Connolly Bookshop and New Theatre, the second floor two-bedroom apartment has a €235,000 guide price. In previous auctions last year it was guiding €295,000 and subsequently €250,000. Extending to 829 sq ft the property has an open plan kitchen/living room, two bedrooms, one en-suite, as well as a bathroom.

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