OfficeSale: Merrion House and its 2.5-acre site on the Merrion Road could be redeveloped, writes Jack Fagan
Castlethorn Developments, owners of Dundrum Town Centre, has paid €50 million for an office investment, Merrion House, at Merrion Road in Dublin 4.
The off-market deal was agreed with Bank of Ireland Asset Management which bought the property in 1998 from one of the tenants, Jacobs Engineering.
Castlethorn's principals - Joe O'Reilly, Liam Maye and John Fitzgerald - have not given any indication of their long term plan for Merrion House but, almost certainly, they will be looking at the potential to redevelop this high profile site along one of the busiest routes in the city.
The two adjoining office blocks back on to the coastline and are directly opposite the high quality Elm Park office and apartment scheme being developed by a consortium led by Gerry O'Reilly and Bernard McNamara.
Merrion House has a floor area of 7,000sq m (75,348sq ft) and planning permission for an additional penthouse floor. Even when that is added, it will only have four floors compared to seven in some of the blocks being built in Elm Park.
However, if Castlethorn Developments decides to seek planning permission for a similar height it would almost certainly involve a total redevelopment of the site.
The main tenant, Jacobs Engineering, occupies about two-thirds of the space on a sub-letting from Eircom under a lease which does not run out until 2015.
The current rent of €258 per sq m (€24 per sq ft) was due to be reviewed some months ago. The other tenants, Combined Insurance and Swiftcall, bring the present rent roll up to around €2 million per year and the initial yield to almost 4.5 per cent.
An office suite of 983sq m (10,581sq ft) is currently vacant in the main building along with 1,000sq m (10,764sq ft) in the separate block once occupied by Swiftcall. There are about 138 car-parking spaces on site.
John McCann of Atis Real Harrington Bannon, who advised Castlethorn's property investment company, Lamtos Ltd, said they would shortly be offering the vacant space for letting and, when tenants were found, the overall rent roll would rise to about €2.6 million. Brendan J Walsh and Quinn Agnew acted for Bank of Ireland Asset Management.
Merrion House has had several owners since it was built in 1978 for the Smurfit Pension Fund. It was held for several years by Consolidated Land, a consortium of British and Irish investors which controlled a substantial property portfolio in both countries.
The sale to the Castlethorn company comes after the successful launch of the first phase of the Dundrum Town Centre, now thought to have a book value of over €1 billion. The next phase of the scheme, due to be launched in September, will include the leading UK department store Harvey Nichols. After that, Castlethorn will embark on the redevelopment of the old shopping centre on the opposite side of Dundrum village.
Close to the 2.5-acre Merrion House site, another development company, Ashcastle Developments, was recently refused planning permission to build 53 apartments and a public park beside Booterstown marsh bird sanctuary.
