In what is the largest pre-funding office deal so far this year, property developer Dermot O'Rourke's family trust is to fund a landmark building at Heuston South Quarter, writes Jack Fagan
A FAMILY TRUST is to forward-fund a partially completed €60 million office block at Heuston South Quarter (HSQ), one of Dublin's largest mixed-use developments opposite Heuston Railway Station and adjoining the Royal Hospital in Kilmainham. It is the largest pre-funding office deal so far this year.
Keredern Partnership, which bought the investment, was set up by property developer Dermot O'Rourke after he and his former partner Gerry Conlon sold the Millennium Park in Naas two years ago for €322 million. O'Rourke and his wife, Pearl, have three children, David, Ian and Diane. The fund is being managed by David.
Last summer Keredern also paid €90 million for the headquarters of Hermes at 13/15 Rue de La Ville L'Eveque in Paris 8.
The Brunel block at HSQ is being built alongside the impressive new Eircom headquarters and is due to be completed next March.
The investment is likely to show an initial yield of over 5 per cent, depending on the rent achieved, the length of the lease and the strength of the covenant.
In the meantime, the developer is to underwrite the rent for up to five years.
The senior debt for the overall scheme is being provided by Bank of Scotland (Ireland) Ltd.
The 12-storey building will have a net internal area of 7,080sq m (76,208sq ft) and 75 car-parking spaces. Agent HT Meagher O'Reilly, who acts for the vendor, is shortly to launch it on the letting market at a rent of €484 per sq m (€45 per sq ft).
Designed by Anthony Reddy & Associates, the block will feature a sweeping curved glass facade and will overlook the planned one-acre Grand Central Square within Heuston South Quarter. It will be finished to the very highest standards.
Fergus O'Farrell of Savills HOK, who advised the O'Rourke family, said the deal provides his clients with a top quality office building in an excellent location where there were good prospects for capital appreciation and rental growth.
The pre-funding deal will provide a strong vote of confidence in the HSQ development which is being carried out on a joint venture basis between Goodbody Stockbrokers and Rhatigan Developments.
In 2005, the partnership paid €79 million for the 8.2-acre site. When the entire range of facilities are completed in 2011 it is expected to have an end value of almost 10 times the purchase price.
HSQ has been designed as a new high quality city quarter with not only offices, apartments and a hotel but a broad range of shopping and leisure facilities that will be in place from an early stage.
Discussions are understood to be under way with Marriot to operate the 260-bedroom four-star hotel.
There will also be 6,000sq m (64,583sq ft) of retail space, including a 600sq m (6,458sq ft) feature restaurant and two others. There are unconfirmed reports that Superquinn has pitched for the convenience store which will extend to 2,043sq m (21,990sq ft).
Starbucks has already booked an outlet of 418sq m (4,500sq ft). The retail facilities will be served by a dedicated basement car-parking area with access to the stores via a travelator and lifts. The expectation is that many motorists will do their weekly shop at HSQ on the way into or out of the city. Over 50 per cent of the 343 apartments being developed around the rear of the site were sold within days when they were launched in 2006. The balance are due to be released for sale next September.
The site is also to include a 3,716sq m (40,000sq ft) museum which is to be handed over to the OPW.
HSQ will have a total office capacity of 51,095sq m (549,981sq ft), including the 25,000sq m (269,100sq ft) purpose-built Eircom headquarters. The company has already begun to move in staff on a phased basis and by June a total of 1,500 employees are expected to be working there.
All the buildings on site will avail of a biomass powered community heating system while office blocks will have twin and triple skin facades to reduce solar gain.
When the entire complex is completed within three years, HSQ will have 7,000 people working there who will be able to avail of the railway service on the opposite side of the road and the proposed Dart interconnector which will link Heuston Station with St Stephen's Green and Pearse Street station.
HSQ's strategic location next to an efficient transport service will give it the edge over many rival schemes.
