Wednesday 18 July 2018

Merchants Quay office portfolio guiding at €25m

An aerial view of the of the Merchants Quay portfolio
An aerial view of the of the Merchants Quay portfolio
Ronald Quinlan

Ronald Quinlan

Agent Knight Frank says it expects to see significant interest from domestic and international funds, and from private investors for a portfolio of five adjoining buildings on Dublin's Merchants Quay, which it is offering for sale at a guide price in excess of €25m.

Extending to over 10,000 sq m (108,000 sq ft) in total, the portfolio is a mix of modern and period office space distributed across the properties, which range in size from 1,144 sq m (12,314 sq ft) up to 4,210 sq m (45,316 sq ft).

The overall portfolio occupies a high-profile site of 5,655 sq m (60,870 sq ft) fronting on to Merchants Quay and Bridge Street. The buildings have over 82.5 metres (270 metres) of frontage to the river Liffey, directly overlooking the Four Courts.

The portfolio comprises Merchants Hall, Merchants Court, Marshalsea Court, Merchants House and Bond House. It also includes 180 spaces in a multi-storey car park accessed from Cook Street.

The largest property, Marshalsea Court, was developed in 1992. The building provides approximately 4,210 sq.m (45,316 sq.ft) of modern office accommodation over five floors. The passing rent here is €1.18m per annum with rents ranging from €15 to €29 per sq.ft.

The largest tenant, Simpson Xavier (now trading as BDO), accounts for 66pc of the total rent under a lease expiring in 2027. The property has a weighted average unexpired lease term (WAULT) of approximately 7.1 years.

Merchants House comprises a four-storey office building completed in 1998. The building provides a net internal area of approximately 1,835 sq m (19,752 sq ft). The building is multi-let with six office tenants and a coffee shop at ground floor. The property produces an annual rent of €334,710 with two vacant office units. The rents in the building range from €12 to €22 per sq ft, with an average WAULT of 1.5 years.

Bond House interlinks with Merchants House, a 1,862 sq m (20,000 sq ft) office block developed in 1988. Bond House has its main entrance from Bridge Street and is laid out in smaller office suites ranging from 28 sq m to 322 sq m. The building produces a current income of €227,529 per annum with four vacant units.

Merchants Court is a four-storey office building developed on the site of a former warehouse. The block, which was completed in 1987, has a total area of 1,404 sq m (10,861 sq ft). The layout is unusual, with small offices arranged in a mall corridor format and natural light provided by a glazed atrium. The property produces a current income of €126,110 per annum. Four of the office units are let on long leaseholds subject to a nominal rent. The WAULT at Merchants Court is 2.9 years.

Merchants Hall is a four-storey office block laid out in an L-shape around a central courtyard. Developed in 1995, the block has a total area of 1,145 sq m (12,325 sq ft). The property has a central core with offices to its front and rear. It is multi-let with rents ranging from €11 per sq ft to €23 per sq ft. The WAULT at Merchants Hall is 5.2 years.

The Merchants Quay portfolio is producing a current income of approximately €2.112m. Based on its guide price of €25m, the prospective purchaser can expect to secure a net initial yield of 7.8pc once standard acquisition costs of 8.46pc are taken into account.

Ross Fogarty of Knight Frank says: "This sale provides an opportunity for an investor to acquire a city centre portfolio providing a strong cashflow with an overall WAULT of over 5.1 years.

"The passing rents reflect an average level of approximately only €22.50 per sq ft, including car parking. There is potential to push the income to over €3m per annum by letting vacant space."

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