Kennedy Wilson bets on suburban Dublin offices
The European arm of US property giant Kennedy Wilson has spent more than €75m for a number of office blocks around Dublin, in an ambitious bet on the suburban office market in the capital.
Kennedy Wilson Europe has agreed terms to buy the Chase Building in Sandyford for €62.5m and will spend another €14.4m on three office buildings at Blackrock Business Park in Co Dublin. It has also taken over a site in Stillorgan.
The deals mark something of a new departure for Kennedy Wilson, which has broadly focused on either central Dublin or large scale office developments such as Central Park near Leopardstown racecourse.
Kennedy Wilson Europe Ireland head Peter Collins said his firm believes the suburban market is now ripe for investment. "Following significant improvement in city centre office rents and capital values over the last two years we believe that top quality suburban offices are poised for a catch up," he said.
"In addition, both the Chase and Blackrock provide us with attractive asset management opportunities to add to and reconfigure space, lease up voids, benefit from rent reviews and re-gear leases to grow values," Mr Collins added. The Chase Building, which had been owned by Chase Arkle, is a 175,600 sq ft block with 242 car parking spaces.
The sale price reflects a net initial yield of 4pc, but the building is little more than two-thirds occupied and so the company believe it has significant scope to for that yield to increase in the future.
The average rent for current tenants is €19 per sq ft - well below current market rates. The Blackrock offices, meanwhile, were bought from Hudson Advisors.
Those properties comprise some 50,500 sq ft of space and were completed in 2007.
They are let to a number of tenants with a weighted average unexpired lease term of 5.2 years. In contrast to the Chase Building, the Blackrock properties are 98pc occupied.
News of the deals came as Kennedy Wilson Europe said it had offloaded property worth (£148m) €188m in the first quarter of this year and remains on track to sell assets worth £300m by the end of June.
As well as the office deals, the firm has also bought the Leisureplex site in Stillorgan for €15.25m.
The 2.2-acre property is adjacent to the Stillorgan Shopping Centre and is likely to be redeveloped.