Irish Life splits all its commercial property funds along the following lines: 60 per cent office space, 28 per cent retail space and 12 per cent industrial space. It has over 100 separate holdings spread across its funds with an average value of £8 million.
The strategy is to invest only in quality properties that are in the best location, according to Sean O'Brien Property Investment Manager with Irish Life.
"The design should be flexible, the specification must be of a high standard. We also look for good quality tenants with upward only rent reviews and repair obligations on the tenant," he said. This approach guarantees a good quality income stream, according to Mr O'Brien.
He gives the Anglo Irish Bank headquarters building at St Stephen's Court on St Stephen's Green as an example. It has a top location and generous car-parking with a good tenant.
Properties of that calibre can attract rents of between £30 per sq ft and £40 per sq ft. This type of office space is valued at £350 to £500 per sq ft and a typical 40,000 sq ft office building such as St Stephen's Court is worth £15m.
Outside of the city centre the fund invests in new office buildings such as the Eircom building in Sandyford. This type of out of town office space can be rented for £16 to £19 per sq ft.
The fund's flagship building in recent years has been the Ulster Bank head office on George's Quay in Dublin. Irish Life assembled the site over 20 years and developed it in the middle of the early 1990s recession. It stood empty for six months before being let to the bank at £27 per sq ft which was comparable to IFSC rents at the time. O'Brien estimates that if the 100,000 sq ft Ulster Bank building was put on the market now, it would be worth £50 million. "It turned out well with hindsight, but it was a nervous time," he said.
