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Saturday 23 August 2014

Redwood Portfolio expected to smash its €160m guide

Peter Flanagan

Published 12/06/2014 | 02:30

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2 Grand Canal Square

THE Redwood Portfolio of Dublin office and retail units is expected to easily top its €160m asking price as potential buyers move to the second round of the bidding process.

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Second round offers are due next week, with IPUT, Irish Life and Hibernia REIT among the bidders for the entire portfolio.

US firm LoneStar Funds are believed to have made an offer for two retail properties included in the portfolio, while an individual has expressed interest in at least one of the office blocks.

Kennedy Wilson and Green REIT are also thought to be through to the next round of the sale process.

Redwood includes office blocks 2 Grand Canal Square, The Observatory on John Rogerson's Quay, and One Clarendon Row.

The portfolio also includes residential units at Chatham Street and South King Street.

The properties are being offered for sale by Joe O'Reilly's Chartered Land and the National Asset Management Agency

The portfolio has a total area of approximately 30,300 sqm (326,000 sq ft), an annual income stream of approximately €8m and a weighted average unexpired lease term of 10.7 years.

While the entire portfolio can be had for €160m, investors will also have the option of bidding for individual properties as well.

By far the highest profile property contained in the portfolio is the office building at 2 Grand Canal Square, which has a guide price of €80m, equating to a net yield of 5pc.

The eight-storey over basement block was designed by celebrity architect Daniel Libeskind and towers over Grand Canal Square.

While that property was originally guiding around €80m, it is now expected to comfortably exceed that.

When nearby office block Grand Canal Square changed hands for €93m – equivalent to about €700 a foot – last December it set a new floor for the prime Dublin office market.

Informed sources though have made clear that 2 Grand Canal is likely to easily eclipse that price.

Capita Financial Services occupy 52,000 sq ft while William Fry Solicitors, which is due to take occupation at the beginning of October 2014, will occupy a further 93,000 sq ft. The investment will produce an income of approximately €4.44m per annum with potential for further uplift when the remaining ground-floor suites are let.

The floorplates are smaller in The Observatory but there is no shortage of interest in that building as well.

Current occupiers include Morgan Stanley as well as online payment service provider Realex. Lease negotiations are at an advanced stage with a new occupier to take 4,119 sqm, and once completed will leave only a ground-floor suite of 115 sqm unoccupied.

Savills' Fergus O'Farrell and Knight Frank's Adrian Trueick are running the sale process.

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