US investor pays €75m for Dublin social housing portfolio

US-headquartered investment giant Franklin Templeton has paid about €75 million to secure ownership of a portfolio of 156 apartments in Dublin.

Developed by businessman Emmet O’Neill’s Kouchin Holdings, the units are distributed across five new social-housing schemes in Deansgrange, Dun Laoghaire, Donnybrook and Clondalkin. The price paid by Franklin Real Asset Advisors represents an average of €480,769 per unit.

The Joinery is the largest of the five developments. Located at Baker’s Point on Pottery Road in the southside suburb of Deansgrange, it comprises a total of 78 apartments over six floors along with two retail units extending to a total area of 6,500sq ft at ground-floor level.

The second scheme within the portfolio, known as the Cotton House, is situated on Northumberland Avenue in Dun Laoghaire, It comprises 12 apartments over four floors with a retail unit at ground-floor level.

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Both the Joinery and the Cotton House are fully let to Dún Laoghaire Rathdown County Council on a 25-year standard council lease, with 23 years left until expiry.

The third development in the portfolio is located at Donnybrook Crescent in Donnybrook village. Situated in a high-profile position directly across the road from the site of the former Kiely’s pub, Lovett House consists of a six-storey building comprising a total of 38 apartments above two retail units at ground-floor level.

The scheme is fully let to Dublin City Council on a 25-year standard council lease with approximately 23 years left until expiry.

Franklin Real Asset Advisors have also acquired both the Floraville Lodge and Floraville Cottage schemes on Monastery Road in Clondalkin. These are fully let to South Dublin County Council with around 23 years remaining on the original 25-year standard council lease agreed to by the developer.

The completion of the deal sees Franklin Real Asset Advisors securing ownership of 19 of the 20 apartments in Floraville Lodge and nine of the 10 apartments in Floraville Cottage, with South Dublin County retaining ownership of the two apartments it acquired prior to the sale, under the terms of its Part V agreement with Kouchin Holdings.

While Kouchin Holdings declined to comment on the sale of its Dublin apartment portfolio, The Irish Times understands the deal was negotiated over a period of two years. It is understood that Franklin Templeton had initially expressed an interest in buying the apartments at The Joinery scheme before broadening its offer to include the four other developments.

Niall Gunne and Brian Shields of JLL represented Kouchin Holdings in the negotiations, while Shane Cahir of CBRE acted on behalf of the purchaser.

Franklin Templeton stands to secure a blended net initial yield of just under 3.45 per cent on its investment with rent reviews every three years linked to the European Central Bank’s inflation rate monitor, the Harmonised Index of Consumer Prices. The standard council lease agreed to by the developer equates to 85 per cent of market rent.

Commenting in a statement on the completion of the deal, Franklin Real Asset Advisors managing director Raymond Jacobs said: “We are delighted to have entered the Irish social housing market with a high-quality portfolio of scale. Our social-infrastructure mandate has created significant additionality in Dublin, where even though housing deliveries are increasing, there is still a well-documented lack of supply.”

Klaus Schmid, director of acquisitions at Franklin Real Asset Advisors, added: “This portfolio provides the strategy with long-term, fully indexed, government-backed cash flows backed by high-quality residential assets. We are looking forward to increasing our engagement in the market by working with local authorities and developers.”