Property Market Update
May 2012 Lisney Services
The ones you may The ones you may know... not know... Lisney Commercial Rental Indices
Index Value
160
140
120
100
80
60
40
Composite Index Retail Index Office Index Industrial Index
Source: Lisney Research Lisney Commercial Rental Indices
2010 2011 Q1 2012
Retail -16.6% -5.6% -2.3%
Office -17.4% -4.3% -
Industrial -23.7% -12.2% -
All Property -17.6% -5.8% -1.3%
Source: Lisney Research IPD Capital Value Growth
Index
700
600
500
400
300
200
100
0
Retail (-68.5%) Office (-62.6%) Industrial (-60.3%) All Property (-64.8%)
Source: Investment Property Databank IPD Capital Value Growth
2010 2011
Retail -10.45% -12.08%
Office -10.50% -10.47%
Industrial -12.73% -11.82%
All Property -10.67% -11.36%
Source: Investment Property Databank Industrial Take-Up Q1 2012
By Area
2%
34%
North 58% Northwest Southwest South 6%
Source: Lisney Research Industrial Take-Up Q1 2012
By Size Category & No. of Transactions
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
1160.0011 0 < 1,000 1,000 - 2,000 2,000 - 4,000 4,000 - 7,000 > 7,000
Source: Lisney Research Industrial Supply Q1 2012
By Location
sqm 1,200,000
1,000,000
800,000
600,000
400,000
200,000
- Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012
North Northwest Southwest South
Source: Lisney Research Industrial Sales
• Ballymount • 1,221 sqm • Sold €260,000 • €213 psm / €22 psf
• Ballymount • 677 sqm • Reserve €99,000 • Sale €270,000 (€400 psm / €37) Industrial Lettings
• Furry Park, Santry • DB Schenker • 7,945 sqm • €54 psm / €5 psf
• Kilcarbery • BWG • 11,950 sqm • €51.70 psm / €4.70 psf Trends in Retail
What’s Hot In • Discount • Short / flexible leases – Penneys • Open market rent reviews – Euro General / Poundland • Break clauses – Lidl/ Aldi • Incentives – TK Maxx • Turnover related rents • Footwear • Restructuring • Coffee Houses – Costa Coffee – Insomnia • Jewellers • Value Food Changing Face of Retail
Gone New Active Occupiers Recent Deals
Hairspray, Henry Street Grafton Street
Holland & Barrett, Henry Street Lisney Shutter Count
No. of Units Unoccupied 12
10
8
6
4
2
0 Grafton Street Henry Street / Ilac Shopping Jervis Shopping Dundrum Liffey Valley Blanchardstown Pavilions Mary Street Centre Centre Shopping Shopping Shopping Shopping Centre Centre Centre Centre Q3 2011 Q4 2011 Q1 2012
Source: Lisney Research Office Vacancy Q1 2012
By Location
Vacancy %
40.0%
35.0%
30.0%
25.0% Overall Dublin 20.0% Vacancy Rate of 19.9% 15.0%
10.0%
5.0%
16.8% 20.3% 22.7% 37.5% 0.0% City Centre North Suburbs South Suburbs West Suburbs
Source: Lisney Research Dublin City Centre Availability & Vacancy
Availability Vacancy psm % 450,000 25.00%
400,000
20.00% 350,000 C 28% 300,000 15.00% 250,000 B 25% 200,000 10.00% 150,000
100,000 A 47% 5.00% 50,000
- 0.00% 2004 2005 2006 2007 2008 2009 2010 2011 City Centre Availability City Centre Vacancy
Source: Lisney Research Dublin Take-Up 2005 - 2011
sqm 350,000
300,000
250,000
200,000
C 4% 150,000
B 100,000 54%
50,000 A 42%
- 2005 2006 2007 2008 2009 2010 2011 Office Take-Up Q1 2012
By Category Size and No of Transactions
sqm
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000 21633-1- - 1-499 500 - 999 1,000 -1,999 2,000 -2,999 3,000 -3,999 4,000 -4,999 5,000 +
Source: Lisney Research Active Requirements Take-Up v’s Rent
Take-Up Rent psm €psm
350,000 700
300,000 600
250,000 500
200,000 400
150,000 300
100,000 200
50,000 100
- -
Take-Up Rent Recent Deals
1
1. Bloodstone Building 3. Burlington Plaza 17,400 sq ft 34,000 sq ft
3 4
2. Minerva House 20,150 sq ft 4. Connaught House 10,600 sq ft 2 Investment Market Overview Q1 2012
• Total available stock €450m. • Closed Q1 €11m. • New to the market Q1 €173m. • Supply up 55% on Q4 2011. • 30% of total stock agreed. • €60m agreed in Q1. • 78% of new stock is offices. • Values weakened over Q1. Prime Yields and Values
3 month Q3 Q4 Q1 yield 2011 2011 2012 change Office 7.75% 7.75% 7.80% ↑ 5 Retail 6.75% 6.85% 6.90% ↑ 5 Industrial 9.00% 9.00% 9.00% Stable
Source: Lisney Research
• Values continued to weaken over Q1. • Average -2.5% in Q1. • Continued downward adjustments in ERVs. Is there a market?
• Appetite for 10 yrs + income. • Offices: 4 new lots on the market in Q1. • Retail: 21 new lots on the market in Q1. • Industrial: Limited stock with long income. • Supply: NAMA, Receivers, Non NAMA Banks (Ulster Bank Portfolio). Who is buying?
• 45% of enquiries for One Warrington were overseas
€250
€200
€150
International €100 Irish
€50
€- 2009 2010 2011 Trophy Deals
• Building completed 2010. • 55,524 sq ft. • Rent roll of €2.12m pa. • Let to Bord Gáis Eireann 2020
• 73,026 sq ft. • Leased to BNY Mellon and Beauchamp's. • Breaks 2021. QIF Qualifying Investment Fund
• Specialist Investment Funds regulated by the Central Bank targeted at sophisticated and institutional investors.
• Fast approval process
• Exempt from Irish Tax
• Used by Hedge Funds, Private Equity Funds, Property Funds
• Can be an Investment Company, Unit Trust, Limited Partnerships or a Contractual Fund
• Very popular in other investment classes
• Minimum investment €100,000 with net worth >€1.25m What is a REIT?
• Real Estate Investment Trust
• Majority are publicly traded companies that own and manage investment property
• 75% of assets must be real estate
• 75% of income must come from real estate
• 90%+ of net income must be distributed to shareholders REIT – Benefits REIT – Downsides
• Liquidity • General stock market sentiment
• Transparent pricing • Trade at a discount to Asset • Low cost Value
• Leverage restrictions • Takeover target
• Economies of scale • Obligation to stay invested
• Facilitate regulated investment • Reporting obligations
in property • Portfolio effect • Portfolio benefits UK & US REITs Residential Sales
Howth Road Quoting: €695,000 Achieved: +€750,000
Windsor Road Quoting: €995,000 Region: €1,100,000 Erne Street Quoting: €395,000 Region: €410,000
Gilford Road Quoting: €625,000 Region: €600,000 Availability
D17 D15 -18% -41% D11 -31% D9 D13 -43% D5 -28% -46%
D3 D7 -42% -39% D1 -36% D20 -57% D8 D2 -34% -38% D10 D4 6-month change in -36% -50% stock of houses & D22 -37% D12 D6 apartments -54% -56% Overall -38% D14 -51% D24 -39% Co. D16 -25% -52%
D18 -34%