Iput secures deal to sell 40 Molesworth St
Fund is to buy Deloitte House in a multimillion euro asset swap, writes Ronald Quinlan
IRISH property fund Iput has received the green light from the State’s competition watchdog to acquire Deloitte House on Dublin’s Earlsfort Terrace in a multimillion euro asset swap with State Street Corporation.
While the precise value of the transaction remains unclear, State Street will in return secure ownership of No 40 Molesworth Street from Iput as part of the deal.
The detail of the asset swap between Iput and State Street, is outlined in a determination by the Competition and Consumer Protection Commission (CCPC) published last Thursday evening.
The determination shows that Iput informed the CCPC on May 24 last of its intention to pursue the deal with Eput Property Trust Nominees Ltd, an investment fund wholly owned by State Street, on foot of a contract for sale signed by the parties seven days earlier, on May 17.
Under the terms of the Competition Act 2002, the CCPC has been called upon on a number of occasions to assess the competitive impact of transactions involving the acquisition of what it terms “rentable commercial office property”. In ruling on Iput’s proposed purchase of Deloitte Ireland’s offices at No 29 Earlsfort Terrace, the Commission considered the company’s existing share of the total rentable commercial office space within the Greater Dublin Area (GDA).
Information provided by Savills Ireland to the CCPC showed that Iput’s Irish property portfolio includes 39 office assets in Dublin comprising a total of 1,957,959 sq ft of space. While the figure is significant, Savills’ analysis showed that it amounts to less than 5pc of the estimated 39,854,264 square feet of rentable commercial office space in the GDA.
The CCPC notes in its determination that Iput’s proposed deal with Eput will do little to alter that arithmetic. With No 29 Earlsfort Terrace and No 40 Molesworth Street comprising 64,799 sq ft and 34,241 sq ft of space respectively, the transaction will see Iput adding just 30,558 sq ft to its Dublin office space.
The Commission says that Iput’s share in the supply of rentable commercial office property in the State will remain below 5pc.
The CCPC also points to the existence of 11 suppliers of commercial office space in the Greater Dublin Area and the State, saying that these will “continue to act as a competitive constraint on Iput following the implementation of the proposed transaction.”
The entities, which were identified by Savills at the request of Iput to assist the Commission with its assessment are: Irish Life; Green Reit; Nama; Kennedy Wilson; Hibernia Reit; Davy; Friends First; State Street; Real IS; Aviva, and Credit Suisse.
In approving the proposed deal, the Commission said Iput’s acquisition of Deloitte House would not substantially lessen competition in any market for goods or services in the State.
Iput’s purchase of the property will however represent a significant addition to its existing holdings on Earlsfort Terrace and its environs.
In its submission to the CCPC, the Iput refers to its ownership of 75pc of No 5 Earlsfort Terrace, 75pc of Alexandra House, Block D, at the Earlsfort Centre, Styne House on Hatch Street, and Nos 2 and 3 at the Harcourt Centre on Harcourt Street.
State Street’s acquisition of No 40 Molesworth Street, meanwhile, will see it secure €1.8m in annual rent from online retailer Jet.com. The US company agreed last year to rent 30,000 sq ft of space at the building for a period of 20 years.
Iput chief executive Niall Gaffney described the pre-letting of the property in the midst of its redevelopment as a “strong indication” of the underlying demand for high-quality space in the Dublin office market. Iput acquired the former home of the European Commission in Dublin in March 2013 for €8.4m and spent €13m transforming it.
State Street will garner further rental income from Specsavers. The company signed a 15-year lease for 3,837 sq ft of retail space on the building’s ground floor last year.