Nama is due to confirm this week that it has secured €217 million for 761 Dublin apartments – €57 million more than the guide price.
The unexpectedly high price offered for the rented homes in four separate suburban developments underlines the heightened competition between investment funds for distressed assets being offloaded by the State property agency as well as the higher rents now widely available for apartments.
The recently floated Ires Reit is understood to have been the top bidder for the portfolio, narrowly ahead of the seasoned Californian investor Kennnedy Wilson and a company linked to solicitor and property developer Noel Smyth.
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Ires Reit, a subsidiary of a Toronto-based company, recently acquired 84 luxury apartments adjacent to the Marker Hotel in the Grand Canal Dock area for €50.1 million.
Last September the company also bought 338 other apartments in Dublin as part of its overall strategy to build up a portfolio of 2,300 apartments in the city.
The decision by Kennedy Wilson to pitch for the latest portfolio is hardly surprising given that it has already bought in 1,100 apartments in the city, 420 of them at Clancy Quay near the Phoenix Park. Noel Smyth's Fitzwilliam Real Estate Capital is a sister company of Fitzwilliam Finance Partners which last year joined forces with Selfridges to buy 50 per cent of Arnotts store in Dublin through the purchase of €140 million of loans to the retailer from Ulster Bank.
The apartments now destined for Ires Reit are owned by four different vendors and are at Beacon South Quarter in Sandyford, Dublin 18; Charlestown, at the junction of the North Road and the M50 in Dublin 11; Lansdowne Gate in Drimnagh, Dublin 12; and Bakers Yard at North Circular Road, Dublin 1.
The entire portfolio is producing an annual income of €10.4 million with almost 99 per cent of it coming from the apartments and the remainder from commercial buildings. The new owners will be able to add significant value through rental growth, letting the remaining commercial space and developing four approved sites that will add a further 187 apartments and 7,977sq m (85,863sq ft) of commercial space.
The mix of apartments, duplex homes and penthouses included in the sale are predominantly two-beds (534) with 128 three-beds and the remaining 99 one-beds. Savills and Hooke & MacDonald, which are handling the sale, have told interested parties that based on the headline rents available for apartments and the prospects of letting vacant commercial space in two of the developments they believe a gross rent of €12.6 million is achievable.
The Charlestown development, off St Margaret’s Road in Finglas, includes 235 of the 285 apartments developed by Tom and Michael Bailey’s Bovale Developments in 2007. The current rent roll of €2.8 million is expected to rise to €3.34 million once the rentals adjust in line with market trends.
The Cosgrave Group’s development at Lansdowne Gate in Drimnagh includes 224 of the 280 apartments completed in 2005 along with 224 car parking spaces. The overall rent of €2.97 million is expected to rise to €3.4 million in due course.
Beacon South Quarter was developed by Paddy Shovlin’s Landmark Developments and is producing rents of €3.46 million from 217 apartments and four commercial units.
The site also includes three undeveloped plots that can accommodate a further 132 apartments and 7,120sq m (76,638sq ft) of commercial space.
Once full occupancy within the existing development is reached, gross income is expected to exceed €4.5 million.
The fourth apartment development at Bakers Yard, completed by Cleary Doyle, involves 85 of the 132 apartments and along with six ground and first floor commercial units is producing a rental income of €1.16 million.
An adjoining site of 0.18 of a hectare at the corner of NCR and Portland Street has planning for a further 55 apartments and three commercial units.
