Thursday, October 12, 2006

Eircom Seeking €180 Million Sale Leaseback of New HQ in Dublin

The Irish Times - October 11, 2006

Eircom's distinctive new nine-storey headquarters building - currently under construction opposite Heuston Station in Dublin 8 - is to be sold under a sale and leaseback arrangement following similar successful deals earlier this year by AIB and Bank of Ireland.

Jones Lang LaSalle, which is selling the investment on behalf of Osprey Property Ltd, the property development arm of Eircom, is quoting a guide price of €180 million for the investment which will produce an annual rent of €8 million.

At that price, the lease would run for 15 years and the transaction would show a net yield of 4.25 per cent. Those interested will also have the option of bidding higher figures for 20-year and 25-year leases.

Eircom is apparently confident of achieving a sale at a yield of 4.25 per cent, following at least two other investment sales which showed lower returns. Hibernian's recent purchase of the original AIB headquarters building in Ballsbridge for €170 million will show a yield of 3.7 per cent. Irish Life also settled for a similar return when it completed the purchase this week of a new office building at City Quay for around €72 million.

Eircom will be paying an initial rent of €376 per sq m (€35 per sq ft) for the new building which will have a floor area of 19,550sq m (210,436sq ft) and €3,500 for each of the 190 car-parking spaces at basement level.

With revenues of €1.7 billion, Eircom is the country's leading telecommunications supplier with a 74 per cent market share of the fixed line market and, through Meteor, 16 per cent of the mobile market.

Eircom, recently taken over by Babcock & Brown, says that its decision to move ahead with a sale and leaseback deal for its new headquarters is designed to free up capital to re-invest in its "core business". Sphere: Related Content

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