Ranelagh apartments for €26 million

A SIX-YEAR-OLD apartment development at Sandford Close in Ranelagh, Dublin 6, goes for sale today as a single investment with a guide price of €26 million.

All 119 residential units are currently rented and along with a two-storey office building are producing a rent roll of €2.08 million.

Fergus O’Farrell of agent Savills is handling the sale on behalf of Kieran Wallace of KPMG, who was appointed receiver to Capel Developments by the UK Lloyds Banking Group. Funding for the development was originally provided by Lloyds-owned Bank of Scotland (Ireland) which has withdrawn from the Irish market after heavy losses.

A number of Irish as well as overseas investors are expected to pitch for the Sandford Lodge investment which will show a net income yield of 6 per cent.

It will be the second substantial sale of a Dublin apartment development this year. In May Bank of Ireland shareholder Kennedy Wilson paid €40 million for the 210 apartments in The Alliance building at the Gasworks in Dublin 4, in a deal which is showing a net yield of 6.2 per cent.

Sandford Lodge is one of a small number of high volume residential developments in the Dublin area in single ownership. Its location in Ranelagh, one of Dublin’s most vibrant and popular suburbs, has meant that the apartments are continuously let and there is often a waiting list for units that become vacant.

With housing values still seen to be slipping, many young couples are continuing to opt for rental accommodation until the market turns or until mortgages are more freely available. Sandford Lodge’s popularity has also been helped by the fact that it is within easy walking distance of the Luas service at Beechwood.

Whoever buys the complex will obviously have the option of selling on the individual apartments at a profit once the city apartment market recovers.

The development includes 119 apartments in three separate blocks as well as four semi-detached coach-houses, a basement car park with 130 spaces, a mews building and a two-storey period office building let to the National Adult Literacy Agency for 10 years from 2007 at a rent of €125,000 per annum.

The 59 one-bedroom apartments on site rent for an average of €1,195 per month; 51 two-bed units make around €1,480; four three-bedroom penthouses fetch about €1,775 while four coach-houses are each let at €2,070 per month.

Fergus O’Farrell said that while multi-family investments were relatively new to the Irish market he expected that Sandford would attract buyers looking either for a solid once-off investment or as part of a “residential platform building exercise”.

He predicted that this market would continue to be very active and evolve to compete with commercial investments as more sales became available over the next year. O’Farrell said he expected that 1,000 to 2,000 residential units could come to the market in the next 12 to 18 months.

The Sandford sale will be a serious setback for Capel Developments which under the management of Eddie Keegan, Liam Kelly and John O’Connor had built up a strong following in the new homes market because of the high quality of its work and impressive fit-outs.

However, the company ran into financial difficulties after buying several high value sites just before the property market collapsed. After selling more than 200 apartments at Ashtown in west Dublin, the company went on to pay €77 million for an adjoining site with planning permission for over 500 homes.

Around the same time it sold 65 apartments off plans at Hazelbrook Square in Churchtown, on the opposite side of the city, but by the time it had built the homes, the market had taken a nosedive.

Even before that Capel also paid another €70 million for the Portmarnock Hotel and Golf Links in what turned out to be a property play.

The real value of the facility was based on the potential to do a land swap with another northside golf club in Clontarf. Though the members of that club duly voted for the compensation and the move to the new course, the plan was blocked by Dublin City Council which owned the freehold of part of the Clontarf site. In 2005 Capel also paid €18.5 million for the former Sunday World site in Terenure. It recently changed hands again for less than €5 million.

Sandford Lodge was developed on the site previously owned by the National College of Ireland which is now based in the Dublin docklands.

Capel spent a small fortune on redeveloping the site, always with the intention of holding on to the apartments and the office block as a long-term investment. That ambition has now been scuppered.