A company that has spent €200m turning redundant or underused office blocks — mainly in business parks — into tailor-made office accommodation is preparing to invest another €200m over the next two to three years.
Irish-owned Fine Grain Property has invested in 15 properties across the country, in some cases buying entire business parks such as the 40-acre Westpark business campus in Shannon, Co Clare, where they have planning permission for an additional three buildings.
The Singapore-founded company has amassed a property portfolio of one million square feet since it set up operations here in 2016.
CEO Colin MacDonald, who started his career as a Hong Kong-based banker with HPSC, said they had €40m “ready to invest immediately” and a pool of very strong investors for future funds.
“We don’t go out fundraising as such, we work with our existing investors,” he said.
They include private investors and wealthy European business families “who take a long term view on real estate investments”, said Mr MacDonald.
Fine Grain, with more than 60 clients across the country, has a strong presence in strategic locations including at Citywest Business Campus in Dublin, Limerick (Hawthorn House, Plassey Business Campus with a new, unidentified, client “potentially a big deal” in the offing), as well as office blocks in Maynooth Business Campus, Athlone, Cork Airport Business Park, and Parkmore East Business Park in Galway.
Mr MacDonald said they are the largest commercial real estate investor focused on multiple locations across Ireland, and that they have “the capital to grow”.
Currently they have an annual income of €13m and investors get a circa 7% return per annum with a 12%-15% target over a seven-year period.
The company’s modus operandi is to identify “overlooked or under-managed properties, where the existing owner may be looking to let go of it” and invest in the building, bringing it up to the kind of spec that sits well with a modern workforce, including meeting recognised environmental standards.
While Fine Grain is largely backed by private investors, it received early backing of €25m from the National Treasury Management Agency through the Ireland Strategic Investment Fund and it works closely with the IDA developing quality office accommodation in the regions.
Mr MacDonald said they are looking to grow their offering in Cork where they currently have 20,000sq ft available at Building 5200 in Cork Airport Business Park across a single floor, but with the option of taking 6,000sq ft of that space.
Fine Grain bought the 20-year-old building in 2017. Its current tenants include MBC insurance who moved out from South Mall, Aviva insurance, and Genesis, who make software for healthcare. Mr MacDonald said their approach is to get “like-minded companies” together in buildings where they may be of benefit to one another. He said Fine Grain had spent €260,000 upgrading the airport building.
When doing business with clients, Mr MacDonald said they take a 4+4 approach, reaching agreement within four weeks and closing the deal four weeks later.
“We don’t talk to a client without doing our homework first. We also don’t engage in horse trading or enter a competitive process.
“We make an offer for the property that we think is fair.”
Mr MacDonald developed an interest in “overlooked” properties while operating a number of Irish bars in Singapore, and subsequently got hired by the city’s largest private property developer, the Far East Organisation, owned by the Forbes rich list-ranked Ng family, which led to his involvement in the conversion of the colonial Post Office into what is now the five-star Fullerton Hotel.
In 2007, he set up Fine Grain. Among the trends he says he detects is the desire for workers to return to the office after sustained working from home during the pandemic.
“One of the things we are noticing is that while initially there is trepidation among employers and employees about returning to the office, and about how they will manage, once 50% to 60% are back, everyone else will follow. We are seeing FOMO (fear of missing out).” He also said while those in the workplace were aware of the need for social distancing, ironically, they still wanted social spaces.
“There is still a requirement for people to mix and interact with each other.”