€2 billion portfolio on market for €140 million


#1

irishtimes.com/business/sectors/commercial-property/140-million-for-25-city-centre-investments-1.1507179

€140m wouldn’t even pay the 9% stamp duty on a €2bn portfolio.
Don’t know if it was ever worth that much.
The market isn’t down 93%.

Will still be interesting to see the prices achieved on this.


#2

If I sell my car, without hurry, on the open market and get 5K, what would my car be valued at?

2billion me arse.


#3

That must be an Anglo valuation, figures pulled from their arse.


#4

and the portfolio is only worth what it is worth because of the rental contracts with Government.
When is Government going to look at the rents it pays for unexceptional properties.
This is office space. It’s not specialized stuff.


#5

Price of 2bn against rental income of 14m would give 0.7% yield.
Price of 140m would give 10% yield.

Rents haven’t come down much, have they?

I guess bubble valuations are by definition illogical, or it wouldn’t be a bubble.


#6

Christ they have !
Prime commercial and retail are down 50% easily.

Rates on the other hand. :angry:


#7

but they can’t change the UORR clauses in leases. Happy days for the landlord, i.e. NAMA.


#8

Or maybe the journalist got it wrong :slight_smile:

Maybe he moved over from the Indo.


#9

€140MM asking price is bullshit, it’ll make a yield of 6%, possibly 5%; so then they can write an article saying huge interest in Irish property, portfolio makes 50% over asking price etc etc


#10

Not so sure about that.

Prime investment property has been trading hands at yields of 8% to 10%.

If this sells for 5% odd than that is real yield compression or in other words prices have risen.

I still don’t believe this portfolio was ever valued at €2 billion


#11

It’s BOSI so nothing to do with NAMA.

Nearly prime is nothing. Maybe it was valued at 2B, like on the 50 stories development potential at 500 euros a metre rental.

Looking at the properties involved, I can’t imagine a huge amount of interest in this even at that yield.


#12

Who covers the gap? lol.


#13

Hmmm, really? Last I heard was prime, D2, good (BBB) tenant, 6.3% gross yield – but it’s not my area of expertise. So interested to hear if I’m wrong?


#14

Aghh it’s all convoluted.
Here’s an example on Grafton Street …

irishtimes.com/business/sectors/commercial-property/grafton-street-phone-store-on-market-for-5-5m-1.1385089

So you’re getting a return of 7.75% for the next 12.5 years, as long as the company doesn’t go bust.

But if that were vacant today, you’d probably get half that.
So suddenly the yield could change to 3.875%.

Even if you get the full rent for the next 12.5 years, what happens after that ?
If rents haven’t improved, you’re now getting c€200k p/a.


#15

Thanks.
I’ll check out Hutchison’s CDS tomorrow and see what yield you get on that for comparison/adjustment.


#16

Without question… any half decent investment on the market in Dub for the last year easily exceeds the “guide” price. You’re a little optimistic on 5/6%, but will make less than 7%… I’ve heard the bubble word used in the Dub investment market on more than 1 occasion, but how can well advised, shrewd national & international investors be wrong?? And by-the-way I need an answer - the entire thing makes no sense to me, but the sales figures don’t lie. :confused:


#17

With interest rates at astonishing lows, the big money is more yield hungry than it ever was. Add to this the same fools looking to make up their losses by doubling down…


#18

Hutchison 10YR CDS (in USD) is 1.7% — so essentially you can negate the bankruptcy risk by giving up 1.7% in yield per annum.

All depends really on your cost of funding whether it makes sense. I’d probably swerve myself. I mean, you can buy 30Yr Hutchison debt at a yield of about 6.2% and it’s easily leveraged. All your giving up is the potential capital gain of the property and I’m not convinced that train is coming.


#19

What about repudiation of a lease in an examinership? Will the CDS “pay out” or whatever the correct term is?


#20

No.
:slight_smile: