Hibernia acquires Dublin office property for €52m

Dublin and London-listed Hibernia REIT has acquired the Observatory Building office premises in the South Docks area of Dublin for €52.25 mln.

The property is located on the riverfront at Sir John Rogerson’s Quay 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 86,200 square feet (almost 8,000 m2) 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 130 m2 each and two vacant retail units totalling 191 m2, fronting onto Windmill Lane.

The office space is over 95% let to a range of tenants, including Riot Games and Publicis, off low average rents of €26 per sq. ft., with a weighted average period to break of four years and an average unexpired lease term of 11 years.

Over 44% of the current rent roll has rent reviews during or before 2018 with 56% subject to review in 2019. The annual headline rent is €2.2 mln: of this, €1 mln is currently subject to a rent-free period ending in May 2015 and a further €200,000 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 4.1%. The purchase price reflects a capital value of €586 per sq. ft. for the office space.

Following the completion of this transaction, Hibernia will have concluded eight acquisitions since listing, committing €307 mln, over 82% of the net proceeds raised in December 2013.

The Observatory was part of the 30,300 m2 Redwood portfolio of prime city centre office, retail and residential buildings in Dublin which Knight Frank and Savills began to market in April 2014. The portfolio had a guide price of €160 mln.