Overview Q2 started with limited supply threatening to hold back activity. However, this was not the case with market turnover exceeding €670m in the three months. While this is less than the previous quarter when turnover was €1bn, it is behind Q2 last year (€730m) but in the context of the Irish market generally, is a healthy level of activity. The prime markets remain very active but sales of many non-prime investment properties are taking longer to complete due to increased scrutiny by advisors. Loan sales from various lenders are holding back supply of properties to the market. Activity Activity slowed slightly in Q2 following the very strong opening months of the year. This was due to many sales carrying over from 2014, which inflated Q1 activity. A greater proportion of activity is happening in regional and other non-prime markets. There are a number of reasons for this including the fact that this is where the banks still hold stock. Many investors believe there is now greater value in regional cities and that there is greater scope for growth in these markets. Set out below are some of the larger sales during the quarter: Retail • The Cornerstone Portfolio of six regional shopping centres (Orwell SC, Athlone Town Centre (plus 150 apartments), Tipp Town SC, MacDonagh SC, Gorey SC, and Westside SC) was sold to Davidson Kempner by receivers appointed by AIB bank for a price in the order of €117m / net initial yield of 7.2%. • Manor West shopping centre and retail park in Tralee was sold to Marathon for €58.6m. • Four regional shopping centres from the Harvest Portfolio (Dungarvan SC, Thurles SC, Harbour Place SC and Johnstown SC) were sold by NAMA for close to €40m. Investment Update Your Property. Our Business www.lisney.com Turnover Exceeded €670m in Q2. Supply Improved as the quarter developed. Pricing Prime yields continued to fall. Multi-Family Investment: 21 apartments as part of the Ice Rink development in Dolphin’s Barn is currently for sale guiding €3.2m. www.lisney.com 2 nd Quarter 2015 2
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Overview
Q2 started with limited supply threatening to
hold back activity. However, this was not the
case with market turnover exceeding €670m
in the three months. While this is less than the
previous quarter when turnover was €1bn, it is
behind Q2 last year (€730m) but in the context
of the Irish market generally, is a healthy level
of activity. The prime markets remain very
active but sales of many non-prime investment
properties are taking longer to complete due
to increased scrutiny by advisors. Loan sales
from various lenders are holding back supply of
properties to the market.
Activity
Activity slowed slightly in Q2 following the
very strong opening months of the year. This
was due to many sales carrying over from
2014, which inflated Q1 activity. A greater
proportion of activity is happening in regional
and other non-prime markets. There are a
number of reasons for this including the fact
that this is where the banks still hold stock.
Many investors believe there is now greater
value in regional cities and that there is
greater scope for growth in these markets.
Set out below are some of the larger sales
during the quarter:
Retail
• The Cornerstone Portfolio of six regional
shopping centres (Orwell SC, Athlone
Town Centre (plus 150 apartments), Tipp
Town SC, MacDonagh SC, Gorey SC,
and Westside SC) was sold to Davidson
Kempner by receivers appointed by AIB bank
for a price in the order of €117m / net initial
yield of 7.2%.
• Manor West shopping centre and retail park
in Tralee was sold to Marathon for €58.6m.
• Four regional shopping centres from the
Harvest Portfolio (Dungarvan SC, Thurles
SC, Harbour Place SC and Johnstown SC)
were sold by NAMA for close to €40m.
Investment UpdateYour Property. Our Business
www.lisney.com
Turnover
Exceeded €670m in Q2.
Supply
Improved as the quarter
developed.
Pricing
Prime yields continued to
fall.
Multi-Family Investment: 21 apartments as part of the Ice Rink development in Dolphin’s Barn is currently for sale guiding €3.2m.
www.lisney.com
2nd Quarter 2015
2
• Navan Retail Park was purchased by
Target Investment Opportunities for
€11.5m.
Offices
• A 70.8% interest in one of Dublin’s
finest office buildings, Riverside I let to
McCann Fitzgerald, was sold to IPUT
for a reported €80.5m. The rent is due
for a review in October 2016 in what
will be a very high profile test of the
treatment of rents set on leases with
upward/downward review mechanisms
being used as evidence in an upward
only lease review.
• The Royal College of Surgeons in
Ireland sold Beaux Lane House to the
German fund Real IS for €60.5m.
• Green REIT committed to buy One
Albert Quay, a 15,420 sqm office
development that is under construction
in Cork city centre. The building is part
pre-let to PwC and Tyco with the sale
price to be decided once the property
is completed but will range between
€55m and €58m.
• Irish Life purchased George’s Dock 2
in the IFSC for €35.5m. The property
is let to Susquehanna and DeLaga
Landen (on a sub-let from Rabobank).
Industrial
• The Avid Building on Carmanhall Road
in Sandyford was bought by a private
investor for €6m at an initial yield of
12.8%.
Multi-Family
• Tyrone Court, a scheme of 92
apartments in Inchicore, was sold off-
market to IRES for €19.45m.
• The majority of the assets in Project
Plum (units at Northern Cross) were
sold to Marathon for a reported
€18.4m, giving a net initial yield of
5.8%.
There were also a number of other
noteworthy transactions close to being
completed at quarter end but will form
part of Q3 figures. Of particular note
is Royal London’s Sovereign Portfolio
of 13 properties (high quality retail with
some more secondary offices), which
combined, are producing €7.4m per
annum in rent. We understand a sale of
the entire has been agreed to Irish Life
for a reported figure of €154m (30%
ahead of the guide price). Additionally,
City Square Shopping Centre in
Waterford is close to being concluded
for approximately €22m. In Cork, Green
REIT committed to buying One Albert
Quay, a 15,400 sqm office development
that is currently under construction.
The building is part pre-let to PwC and
Tyco with the price understood to be
approximately €55m, but may increase
depending on the final letting position on
completion. A US investor that bought
early in this cycle has taken a profit
and resold Park Lodge, a block of 62
apartments close to the Phoenix Park,
to Patrizia for €15.25m. There remains
very limited activity in the industrial
sector. The lack of investment grade
letting in the last cycle has left very
limited scope for supply to come to the
market. During Q3, the sale of the VWR
facility in Ballycoolin will close following
a deal being completed towards the
end of Q2 to a UK based investor for
a price well ahead of the asking after
competitive bidding.
Supply
The quarter started with limited supply
and while the amount of investment
product on the market increased in April
and May there was a lack of quality stock
on the market at the end of Q2 (€880m
of assets were on the market at the end
of June). Part of this is due to NAMA,
Lloyds and Ulster Bank (RBS) putting
or about to place large volumes of loans
secured by property into the market.
Much of the planned supply for Q3 has
been delayed pending these loan sales,
possibly until later in the year or even
2016.
Nevertheless, in terms of notable
opportunities that did come to the
market and remained on sale at the end
of June, examples included the National
Portfolio (retail parks in Letterkenny,
Tullamore, Killarney and Nutgrove
in Dublin) guiding €162m; Block R
Spencer Dock (let to the Central Bank,
the OPW and Nationwide UK); the Bank
Portfolio (12 branches at €48m) and the
recently opened Lifestyle unit on Grafton
Street (€16m).
NAMA placed the long anticipated
Project Jewel on the market as the
quarter drew to a close. This is a
Thurles Shopping Centre, one of four regional centres included in the Harvest Portfolio, which sold for close to €40m in Q2
www.lisney.com
St. Stephen’s Green House, Earlsfort Terrace, Dublin 2 T: +353 1 638 2700 E: [email protected]