US property investment group Kennedy Wilson has acquired four offices in Dublin for €24.9 million.
The company, which acquired Bank of Ireland's real-estate business in 2011, said it had bought the properties from an unnamed British bank and from the National Asset Management Agency (Nama).
The four offices total 72,200 sq ft with a capital value per square of €633, a 54 per cent discount to prime. The yield on cost is 5.7 per cent but Kennedy Wilson said the portfolio was currently under-rented.
The acquisitions will be funded from the company’s cash resources.
Kennedy Wilson said it had bought two properties in Dublin’s South Docks on Sir John Rogerson’s Quay from Nama for €11.8 million. It said it had also completed on two South Dublin suburban office assets (53,500 sq ft) from a UK bank for €13.2 million reflecting a capital value of €245 per square foot.
“This portfolio is well located, increasing our footprint in both South Docks and the attractive South Dublin suburbs, where we see increased supply demand pricing tension. The portfolio benefits from asset management angles with relatively short term income to expiry and a number of near term leasing events where the current rents are materially below market rents,” said Peter Collins, head of Ireland at Kennedy Wilson Europe.
“We expect to grow the portfolio rent by c. 14 per cent through a combination of leasing up of void space and growing in place rents to closer to estimated rental values, generating a stabilised yield on the portfolio of c. 6.5 per cent,” he added.
The group’s parent announced revenues of $15.2 million for the third quarter, as against $12.9 million for the same three-month period a year earlier. Adjusted ebitda was $83 million, a 19 per cent increase from the $69.5 million reported for the same quarter last year.
The company said completed $721.5 million of acquisitions during the third quarter, resulting in year-to-date total purchases of approximately $2.7 billion. The acquisitions for the quarter were directed 85 per cent to the UK, Ireland, and Spain, and 15 per cent to the US.
Kennedy Wilson Europe meanwhile reported progress on a number of developments in its Irish portfolio, which include The Shelbourne Hotel, Stillorgan Shopping Centre, Baggot Plaza, Portmarnock Hotel and Golf Links and Central Park in Dublin 18.
“Across offices, our Dublin central business district office exposure is extremely well placed where our estimated rental values of €39 per square foot remain well below market rents for large space users in light of recent market deals at €55 and €60 per square foot,” it said.
“In addition to the commercial leases, we completed 43 private rented sector leases across our Dublin portfolio, where we saw double-digit rental growth in the period. The amenity space we delivered in the second quarter has been extremely well received by tenants and is enhancing our ability to grow rents,” it said.
In a note to investors, Davy said the latest trading update showed there had been no let-up in activity from the group since the start of July.
