Freeing-up capital through sale and leaseback deals on corporate headquarters are all the rage, and ICON at Leopardstown is the latest Irish company to go down this route, writes Jack Fagan
Another Irish company is to embark on a sale and leaseback of its proposed new global headquarters even before construction gets under way.
ICON plc, the global contract research organisation, is expected to secure up to €80 million for four new office blocks and its existing headquarters at South County Business Park in Leopardstown, Dublin 18.
Michael Clarke of Hamilton Osborne King said yesterday that the selling price would reflect a yield of 4.75 per cent.
ICON's decision to free-up capital for its core business comes a week after Eircom announced that it planned to sell and leaseback its new nine-storey headquarters which is under construction opposite Heuston Station in Dublin 8.
That move is expected to release around €180 million for investment in the roll-out of a broadband service. The yield in that case is likely to be around 4.25 per cent.
Both office developments are likely to be of interest to institutions and investment syndicates who have had to look abroad for high value product in recent years.
ICON has already secured planning permission to build four four-storey office blocks linked by a glass atrium to the existing headquarters building. The completed development will extend to 15,868sq m (170,803sq ft). There will also be 338 car-parking spaces on the site which extends to 1.83 hectares.
The new buildings are due to be completed on a phased basis from March, 2007.
Rents will equate to between €247 and €258 per sq m (€22.94/€23.96 per sq ft) and €1,000 for each of the car-parking spaces.
Leases of 20 years will provide for five yearly upwards-only rent reviews though the tenant will have a break option in year 15 once 12 months notice is given. The proposed rent roll can vary from €3,233,000 to almost €4.3 million, depending on which of three options the successful bidders goes for.
Under option one, the existing building of 3,945sq m (42,464sq ft) can be sold with vacant possession, reducing the overall rent to €3,233,000.
Under option two, one of the new blocks with 3,439sq m (37,017sq ft) of floor space would be sold without a lease in place while the third alternative would see ICON occupying all four new blocks, as well as the existing building. In this case the rent roll would be €4,299,600.
ICON was founded in Dublin in 1990 and has grown steadily to become the fourth largest full service contract research organisation in the world.
The company employs 4,000 people in 45 offices in 30 countries. It has annualised revenues of almost $430 million (€343 million) and, for the second quarter of 2006, it reported revenue of $107.4 million (€85.7 million) and pre-tax profits of $12.3 million (€9.8 million).
ICON has been quoted on the NASDAQ since 1998 and has a market capitalisation of $1 billion (€797.6 million).
Hamilton Osborne King is due to sell the investment once proposals are submitted by November 9th.
