Monday 27 January 2020

Key deal to set trend

Donal Buckley

Donal Buckley

Within weeks of a deal collapsing to sell the prime One Warrington Place office block in Dublin 2, another one has been agreed with a US fund stepping in to buy it.

The deal will benefit NAMA and pay down loans taken out by David Arnold, vendor and developer of the property which is let to Bord Gáis as a headquarters building.

It was brought to the market last September and at the time the €27m price quoted by joint agents Lisney and HT Meagher O'Reilly indicated a yield of around 7.25pc.

The new buyer also plans to avail of the staple finance offered by NAMA which will mean that NAMA will lend 70pc of the value of the property and there will be a 3pc premium on the mortgage interest rate.

The previous prospective buyer, Prudential, the UK insurer, is understood not to have required the staple finance but had been insisting on a lower price.

Another attraction of the deal was the prospect of the capital gains tax exemption introduced in this year's Finance Act for properties bought in 2012 and 2013 and held for seven years.

The completion of the deal is also expected to provide a boost to the market as it was one of two major property investment sales for which the market has been waiting for months to complete.

Now that it is done it is hoped that the reasonable price will set a benchmark for other buyers and encourage them to sell for yields close to the 7.25pc level.

Located at the junction of Lower Mount Street and Warrington Place in the south inner city, it is strategically located within walking distance of many office buildings along the canal between Grand Canal Harbour, Burlington Road and Dublin 4 and between the Luas station at Charlemont and the Dart station at Grand Canal Dock.

The relatively new eight-storey office building extends to 5,211sqm and is let to Bord Gáis at a rent of €2.1m per annum, equating to a lower base rent of €392 per sqm.

The 25-year lease provides for rent reviews every five years and includes a break clause in year 10.

It will also be NAMA's second major disposal following the sale last year of Treasury Holdings' Monte Vetro office building for €99m to Google.

The Warrington block is being sold following the transfer of the Anglo Irish Bank development loan to Nama by David Arnold.

Mr Arnold has considerable property interests in Ireland and the UK, much of it acquired at the height of both markets by D2 Private, the company he set up with Deirdre Foley.

One Warrington Place, designed by architects Henry J Lyons, has already acquired a landmark status overlooking the Grand Canal along one of the busiest entrances to the city.

The glass facade includes a large, curved drum feature to add a landmark feature at this road junction.

The block has a B1 energy rating which reduces its running costs to almost half those of a standard third-generation building. Air conditioning costs will be cut by 40pc through the use of its solar system. Water usage has also been reduced by 20pc due to a rainwater harvesting system.

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