New deals show prime yields for Dublin logistics have compressed to 4.25% - their lowest ever level - from 5% only six months ago.
With developers now confident about constructing large warehouses in Ireland speculatively, a circa €53 mln forward sale has been agreed at Greenogue Logistics Park which achieved a yield of 4.25% according to local sources.
An Irish private family office has beaten a largely international investor field and is in exclusivity to buy three buildings under construction totaling 245,000 sq ft, with prelets agreed on two and the third available. The deal is expected to close shortly.
The transaction at this level reinforces evidence from Mountpark’s sale of the Rose portfolio which completed in Q1 2021.
JP Morgan Asset Management agreed to pay circa €500 mln last December to buy Rose’s package of UK, Irish and French new logistics developments. The Irish properties were Units A and B in Baldonnell Business Park.
The yield on the French and UK assets was below 4% with the Baldonnell warehouses achieving 4.25% a source said.
According to CBRE’s last Irish Bi-monthly report, published in early March, prime logistics yields were 4.5% having been 5% for most of 2020. CBRE advised Mountpark.
The Greenogue Logistics Park buildings, units D, E and F, are being developed by local firm Jordanstown Properties in a prime location on the N7 corridor west of the city centre.
JLL advised the developer on the forward funding.
Ireland, which is seeing a surge in demand for large logistics buildings led by Amazon’s entry, still offers investors ‘a country discount’, even though industrial yields there have never been as low before. Nevertheless, agents expect prime yields to compress further during 2021.
The next large industrial/logistics opportunity coming to the market imminently is a granular portfolio of over 100 small assets, to be marketed for circa €170 mln by CBRE and Eastdil Secured on behalf of Core Industrial REIT.
Core Industrial was founded by Daniel Donovan and former agent William Redmond and is backed by one of PGIM Real Estate’s PRECap funds which invest in preferred equity and high-yield debt. Much of Core’s portfolio was acquired via debt buys from NAMA.
Palm Capital, the London-based company backed by KKR, is developing two buildings at Greenogue which are the largest speculative logistics units ever undertaken in Dublin. PropertyEU reported that bids were due in this week on its Palm's only Nordic property, at Copenhagen airport.
