Tuesday 23 January 2018

Starwood Dublin property deal increased by €100m

The Watermarque Building is among the properties being bought by Starwood Trust
The Watermarque Building is among the properties being bought by Starwood Trust
Peter Flanagan

Peter Flanagan

A US real estate investment firm has increased its first major property deal in Dublin by nearly a quarter, taking its expenditure here to more than €450m.

Last month Starwood Property Trust agreed terms to buy an office portfolio from fellow US investment firm LoneStar.

That deal saw Starwood agree to buy the assets from LoneStar for around €350m. Now though it has added three more office properties to the portfolio for €103m.

According to CoStar News, the aggregate purchase price for the 13-strong portfolio, which spans 630,000 sq ft, is €452.5m, with Starwood financing the enlarged purchase with a €294m five-year term loan from Morgan Stanley, which is also an underwriter in the common stock offering.

The deal is expected to close before the end of June.

The original deal came about as LoneStar began exploring refinancing options for the portfolio. LoneStar hired Eastdil Secured ahead of the refinancing but Starwood will instead buy the assets outright.

Among the properties involved is the Watermarque Building in Ringsend, which counts AirBnB and Betfair among its tenants.

The company is also buying the Iveagh Court complex on Harcourt Road as well as Marsh House at 25 to 28 Adelaide Road.

The deal means Starwood Property Trust is the first US Real Estate Investment Trust into Ireland and signals a new class of investor entering the market.

In a sign of the changing face of investors here, Starwood is believed to have beaten a fund tied to the Chinese insurer Ping An.

That would have been Ping An's first investment here and would have been the first major property investment by a Chinese buyer since the crash.

The new profile of buyers will be hugely encouraging to commercial property market, which is entering a new phase of its recovery.

Several of the big private equity firms which went on buying sprees here since the crash are now looking to flip their assets and take huge profits.

To do that though they need a new wave of buyers to enter the market.

The arrival of investor from overseas with long-term plans follows the recovery of commercial property markets in more developed markets elsewhere around the world.

Starwood has retained Eastdil to secure financing, but no Irish players are reported to be competitive in this market compared to lenders from further afield.

In a filing with US authorities, Starwood Property Trust said the portfolio is "located in prime locations in Dublin's central business district".

"As of March 31, 2015, the portfolio was 99.9pc leased and the office properties were leased primarily to multinational and government tenants and had a weighted average lease term of 6.2 years".

"The transaction was sourced by Starwood Capital Group's acquisitions professionals in Europe and expands our core-plus equity investment strategy, which complements our primary business segments and is focused on high quality, well-occupied real estate assets with strong tenant rosters, using only modest leverage.

"Starwood Capital Group has been invested in the greater Dublin market for over two years," it added.

The deal is being financed by a five year term loan from Morgan Stanley worth dome €294m.

Starwood Property Trust is the first of the big American REITs to have bought commercial real estate in Ireland, although most analysts expect more to follow, especially if Starwood is successful.

Sunday Indo Business

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