FINANCE: Private equity firm Lone Star has decided against refinancing its portfolio of Dublin offices, opting instead to sell them to Starwood Property Trust for £266m.
The deal is US REIT Starwood’s first equity investment in Dublin.
Assets in the portfolio, codenamed Project Holly, include the 210,000 sq ft Iveagh Court complex, the 107,000 sq ft Watermarque Building, the 28,309 sq ft 11-12 Hogan Place, and Marsh House, the 60,000 sq ft Irish headquarters of insurance firm Marsh.
Lone Star purchased Project Holly from Nama in January 2014, paying £155m, which was estimated to be a 41% discount.
Lone Star then appointed Eastdil Secured to seek a £300.7m refinancing of the portfolio in addition to 75 St Stephen’s Green in Dublin, a seven-storey, 102,000 sq ft office building, as revealed by Estates Gazette in January.
While the cost of money drove the popularity of refinancing in 2014, in recent months values have increased faster than refinancing costs have reduced.
However, values have increased faster than refinancing costs have reduced.
Robert Murphy, director of agency Murphy Mulhall, said: “The yield compression and rental growth witnessed over the past 12 months provides a compelling rationale for exiting. Internal rates of return are way ahead of schedule.”
When the interest generated by the refinancing deal attracted several equity funds to the assets, Lone Star reorganised the portfolio and put the assets up for sale.
St Stephen’s Green was taken out of the package and is now being marketed separately.
City North, a 100-acre mixed- use development, and the 128-bedroom City North Hotel were also stripped from the portfolio.
Murphy said: “The refinance figures on this portfolio were tight and so the smartest thing to do was to sell.”
Experts said this was likely to be a trend moving forward as larger investors sought to offload assets at the optimum moment.
