2017 has been a very active year for the Irish Commercial Property Fund. In the past year the fund has grown* and continues to attract significant interest from investors.
- 24% increase in number of property holdings
- 24% increase in overall fund size**
Each property has been individually sourced for its contribution to the overall fund performance. Each asset specific strategy has the objective of maximising long term risk-adjusted return for investors. This is achieved through acquiring and holding core stable properties and using value add strategies for other types of properties where capital value can be enhanced through refurbishment, redevelopment and/or increasing rents prior to disposal.
Asset Management Activity
In Q4 2017 Friends First closed the acquisition of Cairn House, in the South County Business Park, Leopardstown, Dublin 18 adjacent to Central Park and Sandyford Industrial Estate. Cairn House is a modern three storey over basement office building. It is partially let to Fonua, a mobile and consumer electronics solutions provider and has short term value-add potential through letting the vacant space. In the medium term plans to develop an additional floor will be explored.
- Core income producing assets
The top 10 tenants account for almost 60% of rental income. It is important to maintain prime, income-producing assets as the foundation of the portfolio to support the long term income profile of the Fund.
One such asset is Unit 100 in North West Business Park, Dublin 15 which is situated in an established manufacturing and distribution location. This property benefits from easy access around Dublin and all provincial routes – off Junction 6 of the M50. The single unit features sought after 15 meter eaves heights. This building is fully let to a high quality long term tenant, Oasis Document Management Ireland.
Friends First expects that the redevelopment of a number of properties within the Fund will add value and enhance the income profile of the Fund over the coming months and years. Blackrock Shopping Centre is at the beginning of its redevelopment cycle. This property is a good example of the potential to maximise rental income and capital value through redevelopment. The plan involves installing a canopy roof structure and improving the size and layout of the individual retail units.
Friends First is also progressing plans for Trident House (in Blackrock) and the contractors have commenced the redevelopment of Enterprise House (which is pre-let to Zurich).
Another important aspect of property fund management is identifying the appropriate time to sell a property. For example, 26/27 South Mall, Cork is currently on the market for sale. This is a partially let, seven storey office building located in Cork City. There is increasing demand for offices in Cork at this time, and following an initial marketing period, the fund management team believe that a significant profit can be achieved (when compared to cost) on this property for policyholders in the coming weeks.