Irish REIT Hibernia has exchanged contracts to acquire Cumberland House in Dublin 2, from owner Morretino Limited (Morretino) for €49 mln.

Irish REIT Hibernia has exchanged contracts to acquire Cumberland House in Dublin 2, from owner Morretino Limited (Morretino) for €49 mln.

The Irish REIT had been looking to acquire the building since last year, when it provided a €38 mln short-term loan secured by the asset to its owners in receivership, Morretino.

As part of the deal, the six-month loan granted in August 2014 is being repaid along with €1 mln of accrued interest.

Cumberland House is a seven-storey office building of 112,000 sq ft (10,400 m2) with parking spaces for 213 cars, which was constructed in the late 1970s. The building is on a 1.6 acre site in a central Dublin 2 location, close to Merrion Square. It is largely vacant and Hibernia said it is in discussions with a number of prospective tenants regarding potential short-term lettings.

The property offers 'significant' redevelopment potential, Hibernia added. It has a planning permission in place to replace or extend the current building to provided up to 250,000 net sq ft.

Hibernia has invested a total of €517 mln since listing in December 2013.

Kevin Nowlan, Chief Executive Officer, WK Nowlan REIT Management, the investment manager, said: 'Cumberland House is an important addition to our central Dublin office portfolio with exciting asset management and redevelopment opportunities and we look forward to working with potential occupiers on plans for it.'

The deal follows Hibernia's acquisition in February of the regional police headquarters in Dublin for €70 mln. The Garda Siochana (police) offices at Harcourt Square, Dublin 2, was sold by Gangkhar Plc, set up in 2013 by a Starwood Capital-led consortium to acquire the €810 mln Project Aspen from Ireland's bad bank NAMA.

Starwood Capital’s consortium, believed to include Catalyst Capital and Key Capital Real Estate, took an 80% stake in the vehicle, with NAMA retaining the 20% balance. The package of 16 loans reportedly sold in 2013 for a 75.3% discount to face value, or around €200 mln, including €80 mln of equity and €120 mln of debt.

The €70 mln paid by Hibernia in an off-market transaction almost repays the previous owners in full.