Upon completion, the build-to-rent scheme will provide 297 high quality apartments. Construction started on Blackwood Square in November with Round Hill Capital (RHC) providing development management oversight. The first phase of the development is set to complete in October 2021, with the final phase in October 2022.
Dillon Eustace advised Round Hill Capital (RHC) and Quadreal, led by Kelly O’Hara, Partner and Head of Real Estate, supported by Fiona O’Neill Construction Law Specialist and Derbhil O’Riordan, a Partner in the Asset Management and Investment Funds Team.
An Interview With Kelly O’Hara, Partner and Head of Real Estate at Dillon Eustace
Please share more about your involvement in the deal.
The deal is the second investment RHC has made in Ireland with QuadReal, following the purchase of Bridgefield in 2018, another apartment PRS scheme of 216 apartments located opposite Blackwood Square.
Dillon Eustace has acted as advisers on both the Bridgefield and Blackwood Square transactions including the initial set up of the joint venture property umbrella ICAV (allowing the segregation of liabilities between Blackwood Square and Bridgefield in a single structure).
We negotiated a detailed development agreement and suite of construction documents with the developer’s team for delivery of the 297 apartments to an agreed specification and timeframe.
We also carried out extensive pre-acquisition due diligence on the title to the scheme and surrounding lands as well as the proposed management company structures and negotiated and agreed the scheme documents with the developer’s solicitors. These included bespoke drafting to take account of shared services and amenities on adjoining third party lands benefitting Blackwood Square.
Why was this a good deal for the parties involved?
Blackwood Square will provide much-needed new accommodation into an undersupplied Dublin housing market. A recent report on the Irish private rented sector (PRS) notes that investor appetite for PRS schemes remains robust, due to the long term stable nature of the asset class, low vacancy rates and consistent yields. As owner of the neighbouring Bridgefield development, RHC and QuadReal have found strong demand for high quality modern accommodation in the area.
They are also working with a leading developer with whom they have established a strong relationship following the successful delivery of the Bridgefield scheme.
RHC also says its investors are increasingly seeing the benefits of the application of innovative technology in an otherwise low yield environment. At Blackwood Square, RHC is deploying the latest PropTech AI tools to maximise site efficiencies and long-term sustainability. When Blackwood Square is ready for occupation, RHC expects to leverage other digital investments made by sister company Round Hill Ventures. These include apps such as Plentific, which help landlords manage repair and maintenance and alongside other tools, will help attract and engage tenants supporting consistent long-term yield.
Were there any precautions you were extra diligent about, given the current economic climate?
Ensuring delivery of the development on time is key and provisions have been agreed to take account of the challenges arising as a result of Covid-19. Flexibility has also been built in, to respond to changing occupier requirements as a result of lockdown living and learnings from other schemes.
The real estate market has seen its ups and downs during the pandemic – what do you have to do to ensure everything is foolproof for the unpredictable future?
The PRS sector is performing strongly in Ireland in spite of the uncertainties caused by the Covid-19 pandemic. While no deal is ever foolproof, the principles underpinning any deal must be strong, with reputable counterparties and funders working together to deliver the project. Flexibility is also key to take account of changing habits and needs whether arising because of the pandemic or changes in society generally, with good design, local amenities and place making becoming ever more important, particularly in the residential sphere.
How do you predict the real estate market will progress in 2021?
We anticipate that, overall, the real estate market in Ireland will perform strongly in 2021. There is considerable pent up demand and capital available for quality investments which, along with positive developments on the vaccine front, is already resulting in increased activity in the market. The retail, food and beverage and hospitality sectors will continue to be challenged but innovation is essential, both in terms of adapting spaces and legal agreements for their use. This change had already started but it has been accelerated by the pandemic and 2021 will be an interesting year in terms of new approaches to the use and re-purposing of our town and city centres.
How did it help having a construction specialist on the team?
It is invaluable to have a construction law specialist on our team who not only understands the industry forms of contract but also the technical issues and considerations that arise in large scale construction projects and who can “speak the language” of the many technical advisors involved.
