Quarter 3 Activity
- Redevelopment of Enterprise House, Blackrock is due to complete in quarter 3, and will reach completion during quarter 4;
- Exciting new tenant secured for the final restaurant unit in the newly upgraded Royal Hibernian Way;
- Final grant of permission received for amalgamation and upgrade of 54 & 55 South William Street, to create a restaurant with apartments on the upper floors.
- 41.5% Retail
- 9.6% Industrial
- 27.8% Office
- 14.1% Redevelopment
- 1.4% Other
- 5.7% Cash*
* Includes cash, assets and liabilities.
Quarter 3 Financial Highlights
- Strong fund performance of 8.1% for 12 months to 30th September; best performing unit-linked Irish property fund over the period;
- Impressive rent collection rate of 95% to 30th September;
- Top 10 Tenants account for 53% of rent.
Lease Expiry Profile - % Net Rent
Based on scenario with all breaks exercised; excludes tenants on a rent free period.
Irish Commercial Property Fund Statistics
Overall fund size (includes cash): €611.0m
Property portfolio size: €534.7m
Annual rental income: €28.8m
Initial income yield: 4.8%
Vacancy rate: 2.2%
WALT: 6 years 6 Months
The Irish economy continues to deliver robust growth and the main economic indicators are performing better than expected year to date, supporting a healthy real estate market. Unemployment currently stands at a rate of 5.3% (CSO September 2019) which is effectively full employment. GDP growth predictions have been revised upwards to 7.5% by the Department of Finance for 2019, consumer spending is predicted to rise and exports are expected to expand. However downside risks have heightened with the escalation of trade wars, slowing global growth and Brexit uncertainty which may have a significant negative impact on growth in Ireland. The Irish commercial property market continues to perform well with total turnover year to date to the end of September 2019 exceeding more than €3bn compared to €2.6bn turnover for the same period in 2018 (BNP Paribas Real Estate). The sale of Green REIT and expected sale of Starwood’s office portfolio once finalised will significantly add to office transaction volumes between now and year end. Quarter 3 office take up was split evenly between the city centre and the suburbs (of which almost 80% was in the south suburbs) benefiting the Fund’s large office footprint in Sandyford and Blackrock. Despite negative publicity in the retail sector, there remains healthy demand from consumers and occupiers for fashion, food and beverage and leisure offerings in prime locations. The pace of retail sales growth in Ireland has increased by 4.4% year on year (excluding motor trades, August 2019, CSO). Demand in the industrial sector is strong for strategic locations near the M50 from logistics, ecommerce, data centre and food and beverage sectors. Prime yields remained unchanged for quarter 3. Office yields are at 4%, prime retail is at 3.2% and prime industrial yields at 5.2%. (Lisney).
The 12 month rolling performance of the Fund to the end of quarter three was 8.1%, the best performing property unit linked fund over this period. Strong performance is being driven by our value-add and redevelopment projects. The Fund’s income profile remains attractive with an initial income yield at the portfolio level of 4.8% and a weighted average lease term (if all break options are exercised) of six and a half years. Our tenants are of exceptionally high standard (Woodies, Musgrave, Disney and the OPW for example). Quarter three was an active period for the Fund in terms of redevelopment, new lettings and planning decisions. Our redevelopment projects are progressing very well with Enterprise House, Blackrock expected to complete on target, during quarter 3 2019. Works on the adjacent Shopping Centre are continuing, including a new facade, bespoke glazed roof and an additional storey of accommodation. Final completion of works are expected during quarter 2 2020. In Royal Hibernian Way, an exciting new tenant has been secured for the final restaurant unit in the newly upgraded mall, Brazilian restaurant RAH. Royal Hibernian Way now comprises of a strong mix of retail units and high quality food offerings encouraging footfall during the day and evening. In line with our overall strategy while some projects, such as Enterprise House and Royal Hibernian Way, are approaching completion, others are about to commence. We received a final grant of permission from Dublin City Council for refurbishment of 54 & 55 South William Street. Works will commence the refurbishment in October to interconnect the two buildings to create restaurant space on basement, ground and part first floor with five apartments on the upper floors. This is a good example of how we take challenged buildings and employ a strategy to maximise and stabilise rental income. We are working with Dublin City Council’s ‘Living Cities Initiative’ which aims to encourage people to live in the city centre. The Fund is very conscious of environmental aspects and sustainability of newly acquired properties, refurbishments and redevelopment projects which are targeting ‘LEED Gold’ rating standards as a minimum.
Blackrock Shopping Centre
Constructed in 1984, Blackrock Shopping Centre, Frascati Road, Blackrock, is located in a prime location in the affluent suburban town of Blackrock. Due to its very accessible public transport links (N11 with multiple bus routes, DART and M50) it is host to numerous financial services companies including Zurich, Canada Life, Ulster Bank and AIB. Our exciting renovation of the centre includes a complete upgrade of the common areas, the addition of an extra storey of accommodation and a new bespoke glazed roof. A modern new façade and entrance off Frascati Road will transform the exterior of the centre. It is anchored by SuperValu and there are over thirty other units, including well known retailers Lloyds Pharmacy, Holland & Barrett, L’Occitane, Dubray Books and Diffneys Menswear. There are over 200 car parking spaces and these facilities are also being upgraded. Works which began earlier this year are due to reach completion during quarter 2 2020
Unit B Merrywell, Ballymount Dublin 12
Unit B Merrywell Industrial Estate in Ballymount, Dublin 12 was acquired for the Fund in 2017 and is a great example of one of our core properties with a sustainable income stream. The property has a long lease of almost ten years, an excellent covenant and fixed rental reviews. The high quality industrial investment is currently yielding almost 6% for the Fund. The property comprises of a high bay warehouse and distribution facility built in two sections with ten meter and twelve meter eaves and eighteen dock levellers (for loading and unloading goods) on an enclosed site of c.9.4 acres. High eaves heights and dock levellers are attractive and important features when purchasing or selling industrial properties. The tenant Valeo Foods is Ireland’s leading distributor of branded food products with a portfolio of iconic food brands including Odlums, Batchelors, Jacob’s, Roma and Chef brands.
In some tables and charts, due to rounding, the sum of the individual components may not exactly equal the stated totals.