Hibernia offloads Dublin's New Century House for a decent return

Hibernia REIT announced on Wednesday that it has exchanged contacts to sell New Century House to a fund managed by Credit Suisse Asset Management Global Real Estate for €65.3m.

The London-listed real estate investment trust said the price was “modestly ahead” of its March book value, and reflected a net initial yield of 4.0% and a capital value of €815 per square foot for the office accommodation.

Completion was expected to occur in September.

The company said the property is situated on Mayor Street in Dublin's International Financial Services Centre, and comprised 80,000 square feet of offices with further basement storage areas and parking.

It said it was fully let to the Bank of Ireland, producing rental income of €2.9m per annum - or around €31.50 per square foot for the office space - with 0.6 years to rent review and 5.6 years to lease expiry.

Hibernia purchased New Century House in March 2014 for €47m - that price representing a capital value of €585 per square foot for the office accommodation, and a net initial yield of 3.9%, rising to 5.9% following the expiry of a rent abatement in October 2015.

The sale price gave Hibernia an ungeared internal rate of return on the investment in excess of 12%.

“New Century House was Hibernia's first office acquisition following our initial public offering in late 2013,” said chief investment officer Richard Ball.

“Since then the building has increased in value substantially, helped by the strong recovery in the Irish property market and by demand for prime office assets in Dublin's city centre.

“The sale continues our recycling of capital into new projects.”