Saturday 3 December 2016

Hibernia Reit predicts rent hikes, as docklands office block set for sale

Peter Flanagan Commercial Property Editor

Published 25/05/2016 | 02:30

The PWC offices at Spencer Dock, Dublin. Photo: Caroline Quinn
The PWC offices at Spencer Dock, Dublin. Photo: Caroline Quinn

One of the biggest standalone office blocks in the country is on the verge of being sold after an international fund agreed terms to buy the property.

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An overseas investor has agreed to pay close to €240m for the office block at One Spencer Dock on Dublin's north quays. The block, which is almost fully occupied by PwC, is seen as one of the top property assets in the city.

While a deal has been agreed, it is thought to be some time before the sale will formally close.

This is at least the second time the block has been "under offer" in recent months.

Receivers David Hughes and Luke Charleton of EY, acting for Nama, put the building on the block last year. A deal had been agreed with US investor Hines, but that fell apart earlier this year, apparently after a fund backing the deal pulled out.

Hines beat off IPUT and financier Alan McIntosh for the asset last year. Market sources believe an under bidder is involved this time around but the Irish Independent understands neither IPUT nor Mr McIntosh is involved in the present sale.

Savills and CBRE are managing the sale. All parties declined to comment.

News of the deal came as property firm Hibernia Reit said the net asset value (NAV) of its portfolio jumped 17pc in the year to the end of March and boosted its dividend.

The firm, which invests mostly in office blocks around Dublin, said its NAV - the key measure of a property firm's performance - topped 130.8c per share last year.

Hibernia, which is renovating offices across Dublin, said its profit before tax rose 47pc to €136.3m. The final dividend has been increased to 1.5c per share from 0.8c.

The company retains a war-chest of around €265m and chief executive Kevin Nowlan said his company expected to spend that on more properties on a case by case basis.

"We aren't in a place where we must spend all this. Instead we have it there and we will deploy it prudently as the opportunities arise," he said.

The company said the average rent across its portfolio in central Dublin was €33 per sq ft. That is far below current market rates which are closer to €55 per sq ft. However a large number of Hibernia tenants are due to have a rent review within the next two years, which should ensure a much higher rent roll in a short space of time.

Mr Nowlan added that he still sees demand outstripping supply for some time to come.

"We are now seeing indigenous Irish companies looking for more space so it has gone beyond overseas firms.

"Most of the new office blocks being constructed will not come onstream until late in 2018," he added.

The firm is refurbishing the former Commerzbank House in the IFSC and is extending Cumberland House in Dublin 2. Twitter will move into Cumberland later this year.

It is also building new blocks at Windmill Lane and John Rogerson's Quay. Those projects are said to be developing well.

Hibernia shares closed flat at €1.28.

Irish Independent

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