Investors looking for a combination of immediate rental income underpinned by a strong tenant covenant and value-add potential in a prime location may be interested in the sale of the Chancery building in Dublin city centre. The property is being offered to the market by agent Knight Frank at a guide price of €24.75 million. The price being sought represents an increase of just €950,000 on the €23.8 million Credit Suisse paid Hibernia Reit to secure ownership of the property in 2017.
Built in 2005, the Chancery comprises a modern six-storey over-basement office and residential development on Chancery Lane in Dublin 8. The office element of the scheme extends to 3,185sq m (34,283sq ft) with secure basement car parking for 19 cars and further parking for bicycles. The office accommodation is bright and spacious and split between open-plan and cellular spaces. The floors average 530sq m (5,705sq ft) with toilets and kitchenettes on each level, with shower/drying and changing facilities in the basement.
Other grade-A specifications include raised-access floors, suspended ceilings, a mixture of four-pipe fan coil and VRF air-conditioning, CAT5 cabling and a combination of strip, pendant and recessed light fittings. The penthouse on the fifth floor has an outdoor terrace area which extends to 209sq m (2,250sq ft).
There is a separate entrance to the adjoining Chancery apartments, which leads to the main ground-floor entrance hall. The apartment block is four storeys in height with one unit per floor. All four apartments are two-bedroom units and extend to 76sq m (818sq ft) each.
Income
The offices are fully let to three tenants and are producing total rental income of €1,396,693 per annum. Of the current rent roll, 69 per cent is being generated by State tenants.
The ground floor is let to Wella Studio, a leading hairdressing-training company that forms part of the wider Geneva-based Wella Company which is 75 per cent-owned by US headquartered private equity giant KKR.
The first to fourth floors are let to the Office of Public Works and are occupied by the Chief State’s Solicitors Office (CSSO) which has 250 staff working across various legal and administrative roles. Some functions of the CSSO include providing litigation, advisory and conveyancing services to Government departments and representing Ireland at the Court of Justice of the European Union.
The penthouse floor is occupied by Analytic Partners. Founded in 2000, Analytic Partners is a privately held firm that has grown to become an independent global leader in analytic solutions. With 13 offices globally, more than 20 years’ experience and powerful technology, Analytic Partners has partnered with large global brands such as Microsoft, Snapchat, Google Measurement Partner, Facebook Marketing Partner, Amazon Advertising and TikTok for Business.
The four apartments are fully let to private residential tenants on a mix of rolling “Part 4″ and fixed-term tenancies. The rent roll of the residential units equates to €98,928 per annum.
With a passing rent roll of €1.5 million and guide of €24.75 million, the sale of the Chancery building offers potential investors a net initial return of approximately 5.5 per cent.
Value-add potential
The subject property also comes with full planning permission to extend the floor area of the office accommodation by 914sq m (9,838sq ft). Further information is available on the planning portal of Dublin City Council’s website (planning reference 2491/20).
A full BER improvement assessment has also been undertaken by the current owners and this identifies a clear path to deliver an overall target B2 BER rating that will underpin the asset’s future ability to meet the energy and sustainability credentials demanded by modern corporate occupiers.
Ross Fogarty and Adrian Trueick of Knight Frank say: “With overall transaction volumes expected to moderate over the coming quarters due to the lack of ready-made prime office investments available in Dublin city centre, we anticipate greater focus on well-located value-add opportunities. With a weighted average unexpired lease term of 3.7 years, this opportunity provides buyers with a secure immediate income underwrite that allows time to formulate asset management strategies.”
