Hines snaps up shops, office and apartments on South King Street

Global property investor Hines has outbid three overseas investment companies to buy a row of shops, offices and apartments next to the Gaiety Theatre on Dublin's South King Street. The US-based company's offer of €165 million was accepted for the investment, which is located off the top of Grafton Street.

The selling price includes more than €40 million to cover redeveloping an adjoining row of shops and overhead apartments along Chatham Street.

The underbidders were two German funds and the Spanish founder of the Zara fashion chain, Amancio Ortega, reputed to be one of the world's richest businessmen.

Ortega’s interest in the complex stemmed from Zara’s anchor tenancy in the South King Street complex alongside H&M and Warehouse.

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It was Hines’s second significant acquisition in the Grafton Street area. Almost two years ago it paid more than €55 million for the Grafton Collection, which included retail buildings as well as Hickeys Pharmacy at the junction of Grafton and Duke streets.

The South King Street investment was sold on behalf of US fund Lone Star, with a projected rent roll of €6.8 million and a 50 per cent retail weighting. The centre will have a 4,566sq m (49,158sq ft) of retail space and 5,568sq m (56,936sq ft) of office accommodation.

Zara originally agreed a base rent of €915,000 for the shop as well as a top-up rent of 9 per cent on turnover. H&M has been paying a base rent of €800,000 with a turnover-related top-up of 9 per cent. Warehouse managed to settle for more appealing conditions, offering a base rent of €600,000 without a top-up charge.

US survey technology provider Qualtrics is the main tenant in the office element, known as One Clarendon Row, paying €624 per sq m (€58 per sq ft) for 2,540sq m (27,340sq ft). Qualtrics is also to have the use of the second phase of the office development along Chatham Street extending to 3,716sq m (40,000sq ft). That extension will also include retail space at ground and basement level with apartments on the top floor.

The next phase will have five additional shops, including a corner unit with 882sq m (9,500sq ft) of retail space in the basement and a further 325sq m (3,500sq ft) at street level. There will also be a 130sq m (1,400sq ft) shop and three others with floor areas of 46.4sq m (500sq ft).

Domhnaill O’Sullivan of Savills and Rod Nolan of Bannon are handling the sale of the South King Street investment for Lone Star.