Tetrarch Capital seeks investors for €100m office portfolio

Tetrarch Capital is seeking to raise more than €100 million in equity for a new fund that will purchase 12 office buildings already controlled by the group and provide a liquidity event for Pimco, one of its main backers.

The Irish Times has learned that Tetrarch has mandated Merrion Capital and UK-based real estate adviser Leon Partners to raise the funding, which will be used to acquire a portfolio of 12 offices in Dublin 1 and Millennium Business Park in Naas, Co Kildare.

This money will then be used to buy out the interests of private equity player Pimco, which is expected to make a significant return on its money.

Pimco will continue to be an investor with Tetrarch in the Citywest Hotel, Jacob's Hostel and other offices in Millennium Park.

Tetrarch is rolling over its investment and will have a significant stake in the fund as well as continuing as asset manager of the properties.

There are six offices in Dublin 1 totalling 347,000 square feet. The portfolio, previously connected with developer Liam Carroll, includes the Garda Síochána Ombudsman Commission building on Capel Street, and Macken House on Mayor St near the 3 Arena.

Strong performance

There are also six offices totalling 142,000 sq ft in Millennium Park which is situated near the Dublin-Cork motorway.

It is understood that Merrion and Leon will target Irish high net worth investors, domestic pension and institutional funds, and international investors. The assets are being sold by a joint venture between Pimco and Tetrarch. This vehicle acquired the Ulysses Portfolio (the Dublin 1 office properties) in late 2013 and the Millennium Park assets in July 2015.

The investment was undertaken by the Bravo fund, the real estate private equity arm of Pimco.

Sources said that given the strong performance of the assets since acquisition, the Bravo fund has met its return targets and is looking to recycle capital into other opportunities.

The offices are 56 per cent let to government tenants while corporate tenants include UTV/ITV, Bulgari, Kerry Group and Version 1.

They offer good asset management opportunities with a weighted average time to first break of 3.5 years.

There is a forecast net initial yield – including costs – on the portfolio of about 7 per cent. Good capital appreciation is also anticipated.

As rents in the prime Dublin 2 and 4 areas have risen to €57.50 per sq ft, the market rent in Dublin 1 of €25 per sq ft is attractive to tenants.