Irish property firm pays £62.5m for UK property parcel in joint venture

THE Irish-based property company, Treasury Holdings, has bought a UK investment property portfolio for almost £62.5 million sterling in a joint venture with a British company, EX Lands Properties plc. The deal will produce an initial yield of 9.6 per cent.

The portfolio of 41 properties, most of them offices, was bought from General Accident which along with other British institutions is reducing its exposure on the property market.

Treasury Holdings, which is controlled by Mr John Ronan and Mr Richard Barrett, is one of the most active players on the Dublin "property market. It recently acquired Stillorgan Shopping Centre and will soon begin the development of a £35 million hotel for the Hilton Group at College Street, Dublin.

Treasury and EX Lands will have a net annual income of slightly over £6 million from the UK portfolio, more than half of which is located in London and the south-east. About 22 per cent of the properties are in Scotland. The only Northern Ireland investment involved is a 28,000 sq ft office block at Donegall Square in Belfast which is occupied by GA at a rent of £225,000 per annum.

A breakdown of the portfolio shows that office investments represent 57 per cent of the overall value, retail 37 per cent and industrial holdings 6 per cent.

It is almost certain that Treasury and EX Lands will sell off some of the UK properties, which is likely to produce a significant profit.

Funding is being provided by equity from the joint venture shareholders as well as debt finance from GE Capital, Wurttemberger Hypo of Stuttgart and AIB. The British chartered surveyors, Grimleys, and Dublin-based Bill Nowlan of WK Nolan and Partners assisted with the joint venture.

Many of the 41 properties are occupied by blue-chip tenants including British government agencies, Bank of Ireland, Burtons, Signet Group, British Heart Foundation, Halifax Building Society, Marks and Spencer, John Menzies, Max Factor and Sainsbury.

The decision by GA to dispose of the portfolio will not come as a surprise because like other institutions it wants to cut back on its property investments after one of the worst-ever recessions in the British property market.

Treasury Holdings bought a range of properties from Irish Life in February 1995 for £46.5 million. They included the Russell Court, a 120,000 sq ft building at the junction of St Stephen's Green and Harcourt Street in Dublin.

Last November, the Ronan-Barrett partnership paid £45 million for a property portfolio owned by the Bank of Ireland Pension Fund. It included Stillorgan Shopping Centre which has a rent roll of over £3 million and three nearby restaurants including Blakes which produce a rent of £300,000 per year. Both the Irish Life and the Bank of Ireland Pension Fund portfolios are now held by Castle Market Holdings, a joint ventured company between Treasury Holdings and the British-based Jermyn investment company.