IRISH Life is to invest over £6 million in Citywest, the business park in west Dublin which is aimed primarily at high tech companies. Around £5 million of the investment is being spent on a new 100,000 square foot building, which has been pre let to Saturn Solutions, a Canadian computer software company. The balance is being spent on the purchase of 10 acres of development land at the park.
The deal is thought to be the first major property acquisition in Ireland by Irish Life since it paid £30 million for the Rohan portfolio in 1990. It has since bought two shops in Grafton Street but has concentrated mainly on selling secondhand office blocks to reduce its exposure in the Dublin office market.
The company will secure a return of between 8.5 and 9 per cent from the purchase of the building. Saturn is to pay a rent of £450,000 per annum for the block under a lease with a break option in the 15th year.
Irish Life is believed to have paid around £130,000 per acre for the 10 acres adjoining the Saturn plant. The assurance company has also completed a forward purchase agreement with the developers, Davy Hickey Properties, to acquire units built on the 10 acres.
The land is expected to accommodate up to 200,000 square feet of new developments in about six units. Work is due to begin soon on the first plant, which will have a floor area of 25,000 square feet. If the 200,000 square feet is completed, it will involve a further investment by Irish Life of up to £10 million.
Sean O'Brien, Irish Life's property investment manager, said the investment would provide attractive yields and good rental growth prospects into the future and complement perfectly the company's "restructuring programme".
Brendan Hickey, managing director of Davy Hickey Properties, said it was pleased to have Irish Life on board as partners supporting its decision to create a quality working environment at Citywest for business and investment into the next millennium.
Irish Life is following AIB Investment Managers and New Ireland Assurance in buying investments in Citywest, where three plants have been completed. Two more are under construction.
AIB Investment Managers pre funded a 30,000 square foot plant, which has been let at £6 per square foot to a new joint venture company set up by Saturn and Corel Corporation. New Ireland's agents are currently in negotiations with two or three companies to let a 26,000 square foot plant.
The largest building at the park - a 100,000 square foot unit to be occupied by another computer company, Xilinx - is due to be formally opened today. Davy Hickey is also building a plant of 25,000 square feet, which will shortly be available for letting. The Saturn plant is due to be completed next August.
Palmer McCormack advised Irish Life on the Citywest investment and Jones Lang Wootton acted for Davy Hickey Properties.
