The property on Sir Roger Johnson’s Quay in the Dublin docklands includes 86,213sq ft of office accommodation, eight partially completed two-bedroom apartments, and two vacant retail units.
The development, built in 2006 by Bernard McNamara and Derek Quinlan, was being sold by Nama as part of the Redwood portfolio put on the market in April.
“Our acquisition of the Observatory Building adds another high-quality, central Dublin office property building with substantial reversionary potential to our portfolio,” said the investment manager, WK Nowlan chief executive Kevin Nowlan.
Hibernia REIT was one of the real estate investment trusts established following the introduction of legislation in the 2013 budget. The completion of yesterday’s purchase is the trust’s eighth acquisition, representing a €307m commitment — 82% of the net proceeds raised in December 2013.
The building’s office space is 95% let with a rent roll of €2.2m, €1m of which is subject to a rent-free period ending in May next year and a further €200,000 subject to a rent-free period ending in February 2016, according to Goodbody Stockbrokers. Once the rent-free periods expire, the building will generate a net yield of 4.1%.
Mr Nowlan said the building will offer significant benefits in the longer term through active asset management”.
“The Hibernia portfolio is now taking shape and I am extremely pleased with the progress to date: In less than six months we have deployed €307m in transactions that have enabled us to execute our strategy in a disciplined and focused manner,” he added.
Office tenants in the Observatory Building include Morgan Stanley, Realex, Riot Games, and communications agency QMP Publicis.