Hibernia REIT has exchanged contracts to acquire the Observatory Building in Dublin for EUR52.25m.
The property is located on the riverfront at Sir John Rogerson’s Quay in the South Docks area of the city and is immediately in front of the Hanover Building and Windmill Lane site, which Hibernia recently acquired.
The Observatory Building was built in 2006 and comprises 86,213 sq ft of Grade A office accommodation arranged over six floors accessed from Sir John Rogerson’s Quay, with 47 basement parking spaces. In addition there are eight partially completed two bedroom apartment units of circa 1,400 sq ft each and two vacant retail units totalling 2,059 sq ft, fronting onto Windmill Lane.
The office space is over 95 per cent let to a range of tenants, including Riot Games and Publicis, off low average rents of EUR26 per sq. ft., with a weighted average period to break of four years and an average unexpired lease term of 11 years. Over 44 per cent of the current rent roll has rent reviews during or before 2018 with 56 per cent subject to review in 2019. The annual headline rent is EUR2.2m; of this, EUR1m is currently subject to a rent free period ending in May 2015 and a further EUR0.2m is subject to a rent free period ending in February 2016. Once the rent free periods expire, the building will generate a net yield of circa 4.1 per cent. The purchase price reflects a capital value of EUR586 per sq. ft. for the office space.
Following the completion of this transaction, Hibernia will have concluded eight acquisitions since listing, committing EUR307m, over 82 per cent of the net proceeds raised in December 2013.
Kevin Nowlan, chief executive officer, WK Nowlan REIT Management, the investment manager, says: “Our acquisition of the Observatory Building adds another high quality, central Dublin office property with substantial reversionary potential to our portfolio. Its location adjacent to our existing office building and site with planning permission for 125,000 net sq. ft. of offices on Windmill Lane consolidates our position in this attractive and easily accessible South Docks area and will offer significant benefits in the longer term through active asset management.
“The Hibernia portfolio is now taking shape and I am extremely pleased with the progress to date: in less than six months we have deployed EUR307m in transactions that have enabled us to execute our strategy in a disciplined and focused manner."