Scandinavians fly in

A SCANDINAVIAN investor is the buyer of a significant office investment in Cork, paying about €15m for buildings at Cork Airport Business Park.

Competitive bidding by tender pushed the sale price beyond the €13.5m quoted by joint agents, Lisney, and Peter O’Flynn, of DTZ Sherry FitzGerald, when put to market in October, 2013.

The overseas buyer’s identity hasn’t been divulged, but the buyer was represented by Michelle McGarry, of Colliers in Dublin.

Sources say the Scandinavian individual had considered investing in the Dublin market, but opted for a higher return on this modern office mix, which includes a site with further office building development potential. The same buyer is also understood to be considering other Irish asset acquisitions.

With a rent roll of €1.6m across the five buildings, the yield initially offered was a tempting c 12% and the proposed sale of the group, in one or more lots, attracted widespread national and international inquiries, says Ed Hanafin, of Lisney’s Cork offices, noting that Irish investors showed most interest in individual buildings, rather than the entire. Noting strong interest also in the entire, Lisney and DTZ put it to best bids in mid-November, 2013, and then to tender in December. The number of bidders hasn’t been disclosed.

Having now been signed for circa €15m, or 11% over the asking price, and allowing a circa €500,000 value on the three-acre development site, the sale price equates to a net initial yield of 10.8%, or approximately €120 psf.

It’s one of the strongest open-market office investment sales outside of Dublin in several years, as the circa €40m investment sale by John Cleary Developments, at City Gate Park in Cork’s Mahon, to Irish Life, was effectively off-market.

“Office capital values are below replacement cost in many instances. In economic terms, this suggests an overcorrection in the market — and this has made office buildings attractive to investors,” says Mr Hanafin.

“There’s currently strong investor demand for prime property assets in Cork and there have been a number of recent, multi-million euro sales in the Cork region,” adds Mr Hanafin, referencing the City Gate Park sale, as well as a circa €4m office sale, with Deloitte as tenant, on Lapps Quay, to an investor based in Hong Kong.

The Cork Airport Business Park’s phase one was spearheaded by Omni-stone, with phase two developed by Brooklyn Properties, a consortium that included Bernard McNamara/McNamara Construction, Bank of Scotland, and the Dublin Airport Authority. Amazon is the main occupier in the investment block, with 60,000 sq ft in two buildings, and is under-stood to have had circa 800 employees in Cork around Christmas. Other tenants are Red Hat, Glaxosmithk-line, National Cancer Registry, Hittite and Vertex, who are unaffected by the sale.

Details: Lisney, 021-4275079 DTZ Sherry FitzGerald, 021-4275454 Colliers, 01-6733300