Friday 15 November 2019

Quadrant flips Cineworld on Parnell St for 47pc profit

Cineworld in Dublin
Cineworld in Dublin

Peter Flanagan

A UK property firm has taken a profit of nearly €11m on the CineWorld complex in Parnell Street (left) in Dublin less than a year after buying it.

London-based Quadrant Estates paid just over €22m for the cinema complex - the largest in Dublin - last April.

Now though, Quadrant have flipped the property to Standard Life for some €33.8m.

The move means Quadrant have gained some 47pc in profit in the space of eight months - an enormous return in such a short space of time. The deal is the latest sign of the huge movement in prices in Dublin at present and makes Cineworld one of a growing number of properties to be flipped for large profits. Last year Hibernia REIT forked out €18m for a site in the docklands that had cost just €8m 14 months previously.

The Cineworld sale comes after Quadrant negotiated a new 25 year lease on the property at €1.9m a year.

The 140,000 sq ft complex was bought in 1998 by a group of 22 owners, at a time when the asset carried a number of tax allowances.

When Quadrant and its private equity partner Orion bought the cinema, it said it would be the first of many deals it would do in Ireland. "We will be keeping a close eye on retail and central Dublin," said Quadrant's Christopher Daniel.

"We have not identified any specific properties, but we are aware of opportunities that may be coming up and we will look at those.

"Cineworld is our first deal in Dublin and we have already learned a lot from it."

"We were attracted to that deal because we know the tenant from London and we knew the property was a good performer in the top 10 cinemas across the UK and Ireland. The underlying asset is also really sound, and with a yield of about 8pc that was very attractive to us.

"The fundamentals are also very good for the property. It is the right location in Dublin, so there will always be alternative uses for a location like that if need be," he added at the time.

However the pace of the increase in capital values in Dublin has allowed Quadrant to take a nearly 50pc profit in a very short space of time.

Deals such as these though are likely to become more prevalent in the months ahead, as investment firms that bought major loan portfolios from NAMA and the like are now beginning to churn their portfolios.

Many of the properties that were bundled in those portfolios do not fit the specialisation of the original buyer, with hotel specialists carrying office blocks and vice versa.

Many of the US buyers in particular are understood to have been flabbergasted at the apparent lack of a coherent strategy among some developers with a number of them dabbling across the whole range of the commercial property market but not becoming an expert in one particular area.

Already, Brehon Capital, a Dublin-based fund headed by New Yorker Kevin McGillycuddy has started to churn its portfolio, with sales of the Residences apartments at the Marker Hotel in the Dublin Docklands, along with the Department of Justice headquarters on Stephen's Green.

Both deals turned huge profits for Brehon.

Montagu Evans acted for Orion Capital Management and Quadrant Estates; JLL advised Standard Life.

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