US investors were the driving force behind the acquisition of some €7 bn of direct property and real estate loans in Ireland during the first nine months of 2015.
US investors were the driving force behind the acquisition of some €7 bn of direct property and real estate loans in Ireland during the first nine months of 2015.
________________________
TOP 10 IRISH DEALS
The first nine months of 2015
Source: PropertyEU Research
________________________
1. Starwood REIT expands Dublin purchases to €452m
2. Union Investment confirms €230m Facebook office deal in Dublin
3. Irish Life acquires Dublin retail-office portfolio for €154m
4. Marathon acquires Dublin resi portfolio for €120m - report
5, Ireland sees €1.7b of property investment in H1 2015
6, Starwood buys big in Ireland
7, IPUT acquires Riverside 1 in Dublin
8, Hines acquires Bishop's Square in Dublin
9. Hibernia pays Starwood JV €70m for Dublin police HQ
10. Real IS buys Dublin office block for €59m
Source: PropertyEU Research
________________________
The days of opportunistic pickings in Irish real estate are waning following the Lazarus-like recovery of the market. Yet, US-based private equity investors who pounced on bargains post-crisis continue to put down deep roots in Ireland. A number of US players were among the chief buyers of some €5 bn in property-related loans in the first half of 2015 alone. But increasingly, the capital Dublin is seeing an influx of more institutional-type equity from the UK, Europe and the US.
The mix of foreign and domestic long-term capital resulted in over €2 bn of direct real estate investment in the first nine months of 2015, including €540 mln trading over the traditionally quiet summer months from July to end-September. And given what's hanging over the market, analysts are forecasting an end-year total of between €3 bn and €3.5 bn. Although this would fall short of the record €4.5 bn transacted in 2014 it would be on a par with €3.6 bn volume recorded during the previous peak in 2006.
Dealmaker
Starwood Capital Group, a private investment firm headquartered in Greenwich, Connecticut, is a key player in this move from opportunistic to long-term investment. The firm has now been active in the Irish real estate and loan market for several years.
During 2015 Starwood struck the mother load in terms of direct real estate by lining up the €350 mln Molly Portfolio acquisition for its New York-listed REIT, Starwood Property Trust. The portfolio, sold by Lone Star, the quintessential US opportunistic investor, comprised nine Dublin office buildings and one residential property. The REIT later acquired three more Dublin office buildings.
The full portfolio of 13 assets acquired for a total of €452 mln provides 58,000 m2 of space located in Dublin’s central business district. At end-March the portfolio was fully leased and the office properties were occupied primarily by multinational and government tenants with a weighted average lease term of 6.2 years.
Starwood Capital was also part of the consortium that sold the regional police headquarters in Dublin for €70 mln to Hibernia, one of the first generation of Irish REITs created to breath life back into the capital's real estate market.
While Hibernia and its peer, Green REIT, have been quite acquisitive, much of the prime office stock is going to foreign investors. Union Invesment, the German fund manager, made a splash in May when it confirmed the acquisition of Facebook's Dublin HQ for €230 mln. Another US heavyweight Hines made its mark earlier this year by acquiring Bishops Square in Dublin 2 for €92 mln
Looking at the deal data it is clear international investors have an appetite for Irish real estate that extends beyond the office sector. In April New York-based Marathon Asset Management acquired a 588-apartment portfolio in Dublin for almost €120 mln. Dubbed the 'Plum Portfolio', the assets are located at seven schemes around the city.
Third quarter
Irish equity was working at full tilt in the third quarter of 2015. Irish Life acquired the Sovereign office and retail portfolio for €154 mln, while Ireland's Central Bank shelled out €100 mln for a building designated as its headquarters for €104 mln.
In a recent report, JLL noted that there are a number of big-ticket deals hanging over the market: Elm Park (€185 mln guide price), National Portfolio (€162 mln guide price), and Hazel Portfolio (€115 mln guide).
In October, Savills and CBRE launched the sales process for what they describe as the most valuable office building in Ireland. One Spencer Dock, the Dublin headquarters of professional services firm PwC, is on the market with a guide price of €240 mln, reflecting a net initial yield of 4.7%.
Around the same time UK REIT Hammerson announced the closing of the acquisition of the Project Jewel portfolio of loans secured against a number of retail assets in Dublin, including the Dundrum Town Centre, Ireland’s top shopping and leisure destination. A 50-50 joint venture of Hammerson and Allianz signed an agreement with Ireland’s National Asset Management Agency to buy the package for €1.85 bn, representing a 28% discount to the face value of €2.57 bn.