Merchant Square in Belfast sold for £87m

Middle Eastern investor acquires prime regional office

30 March 2021

Oakland Holdings has completed the freehold sale of Merchant Square in Belfast to a Middle Eastern investor for £87m reflecting a yield of 5.23%.  

Merchant Square reached practical completion in June 2020 and provides 240,000 sq ft of mixed-use accommodation comprising 225,000 sq ft of Grade A offices and six retail units.  The office space is let in its entirety to PwC until 2040 with tenant only break options in 2030 and 2035 and produces a total income of £4.86m per annum.

Merchant Square represents one of the most successful speculative office developments in the UK regions and the largest ever private sector office letting in Northern Ireland.  Once occupied, Merchant Square will be PwC’s largest office outside London with 3,000 employees.  

PwC in Northern Ireland is PwC’s fastest-growing UK region and Belfast is PwC’s recognised global centre for technology, digital advisory services and research.  

The sale is one of the largest regional office transactions to close in the UK since the start of the pandemic and the highest value office transaction ever recorded in Northern Ireland.  

Guy Hollis of Oakland Holdings commented, “we are proud to have created one of the biggest commercial property schemes in Northern Ireland.  Five years ago, Merchant Square was a concept for a quality speculative building which reflected the demand for office space in Belfast.  Now built and fully let, it has attracted interest from global investors.  Merchant Square is an indication of what Belfast can achieve.”

Noel Lander, Director at JLL, commented “the landmark sale of Merchant Square demonstrates the investor appetite for best in class regional offices with secure income streams and strong ESG credentials”.  

Oakland was advised by JLL, A&L Goodbody and KPMG; the purchaser was advised by SPS Investment, King & Spalding International LLP, TLT LLP and BDO LLP.  

PwC headquarters awarded BREEAM Excellent status  

Merchant Square is an environmental first for Northern Ireland 

02 February 2021

Merchant Square in the centre of Belfast, which is set to house 3,000 PwC staff across 9 floors, is the first privately built commercial building of its kind in Northern Ireland to be awarded ‘Excellent’ status by BREEAM UK which asses new and refurbished buildings according to the environmental sustainability standards which were applied during planning and construction.

Merchant Square was design and developed by Oakland Holdings in a project which began in 2017 and was completed in Autumn 2020. The building, which is at the heart of the Belfast business district and adjacent to Belfast City Hall, provides 230,000 sq ft of Grade A office space and is set to become one of the most advanced digital commercial spaces in the city. 

The BREEAM evaluation was completed at the end of 2020. The process measures the steps taken on use of energy, links to public transport, efficiency of water and waste management, heat and light and the management of waste and pollution among other features. BREEAM assessors concluded that Merchant Square meets the ‘Excellent’ standard. 

Adam Dickson, Finance Director of Oakland Holdings welcomed the BREEAM confirmation. 

“When we set out to re imagine the former Oyster House building on Wellington Square, we aimed to provide Grade A office space in Belfast, meeting the demand we knew existed in the commercial property sector, to contribute to the rebuilding and regeneration of Belfast & Northern Ireland and just as importantly to be a leader in the development of sustainable, environmental proofed commercial property. 

“The delivery an excellent BREEAM rated building meant building sustainability and ‘green’ credentials into the project right from the design stage. We made sure that as we demolished the old building as much of the material as could be reused was, and from day one we insisted that the site facilitate cyclists and public transport for workers to travel to and from their office. That meant providing parking space for cyclists, a laundry and maximising our proximity to local transport connections, all in a low carbon design plan.” 

The BREEAM assessors praised the environmental focus in the Merchant Square project. 

“BREEAM and sustainability aspirations for Merchant Square were set out from the very start of the project. The design team worked collaboratively and proactively to establish and deliver an Environmental Management Plan, which contributed greatly to the BREEAM performance of the completed Merchant Square.” 

Merchant Square refinance complete

20 July 2020 

Belfast’s newest commercial property development Merchant Square was handed over to PwC at the end of June, and developer Oakland Holdings has signed off on a major refinancing of the building. 

Construction started on Merchant Square in 2018, and the 10 floor building which provides 230,000 sq ft of Grade A office space was funded through a combination of Oakland Holding’s own investment, and loans from Fairfield Real Estate and the Northern Ireland Investment Fund.

The Northern Ireland Investment fund was established in 2017 and is managed by CBRE UK.  Merchant Square was NIIF’s first investment.  

Will Church, Senior Director, CBRE Capital Advisors, commented: “We are delighted by the early repayment of the Fund’s first loan. Acceleration of this type of development in a market short of funding options is exactly what the Northern Ireland Investment Fund was created for. The ability for occupiers to see sites under development before committing to taking space is critical in completing the funding circle. The location of 3,000 jobs in Belfast by PwC and the early refinance by Danske Bank have been made possible by Oakland’s development skills coupled with NIIF’s funding provision.”

PwC will centralise their Northern Ireland operation in Merchant Square which will house 3,000 employees when fully occupied. With long-established credentials in the technology sector, PwC’s Merchant Square base will be one of the city’s most innovative digital spaces.  As well as being the firm’s global hub for blockchain, and PwC Research, the firm will also relocate the Google Innovation Lab which currently sits within the firm’s existing base in Waterfront Plaza. 

The refinancing of the Merchant Square development was overseen by Radius Corporate Finance. Brian Loughan, Director of Radius Corporate Finance, noted: “ After we managed a 6 month long competitive process involving over 60 possible lenders, early in 2020 Danske Bank was selected to be funder for the refinance. We worked with Danske to deliver a very competitive and well-structured proposition which has provided for the redemption of existing funders. This refinance helps bookend a very successful project by Oakland Holdings, and is indicative of the calibre of projects that Oakland Holdings will seek to continue with in the years ahead.”

Geoff Sharpe, Head of Corporate at Danske Bank, said: “Merchant Square is the largest property transaction in the local market for some time. The investment in upgrading Merchant Square and PwC’s decision to relocate its regional headquarters is a strong demonstration of confidence in the city centre. Alongside other ongoing developments, such as the Transport Hub, it will play a big part in the continued growth and appeal of central Belfast as an attractive location for business. We were delighted to be appointed as the funder and to play our part in the completion of this landmark project.”

Adam Dickson, Finance Director of Oakland Holdings welcomed the re finance. “In spite of the ongoing Covid-19 crisis, and the difficult economic circumstances, we handed over Merchant Square at the end of June. This is the most significant speculative development ever undertaken in Belfast and has led to the largest private sector letting in the region at over £20.00 per sq ft. We have replaced the old 1960’s style commercial buildings that were previously on this site and now we have a shining example of what Belfast can achieve when we are ambitious and brave in our decision making. 

“Merchant Square is a lead project in the emergence of a new Belfast. The re-financing of the development means that we can look ahead to new and further expansions in Belfast and across these islands.” 

The legal advisors for the Oakland Group were A&L Goodbody, whilst Danske Bank were advised by Millar McCall Wylie.

Northern Ireland investment fund awards first loan ahead of forecast

24 April 2018

The Northern Ireland Investment Fund has awarded its first loan; a £20 million senior debt facility to Oakland (FRO) Limited to fund the re-development of Merchant Square in Central Belfast. This is the first speculative office scheme of its size and quality for several years in Belfast and this tranche of funding will provide a gateway to unlock additional private sector funding.

The £100m Northern Ireland Investment Fund, which is managed by CBRE’s Investment Advisory team, part of CBRE Capital Advisors, was launched in November last year to provide debt finance for real estate, regeneration, low carbon and infrastructure projects and is managed on behalf of the Department of Finance and the Northern Ireland Strategic Investment Board.

The funding will finance the re-development and extension of existing offices in Belfast to provide 202,740 sq ft of high quality Grade A office accommodation with a ground floor retail element. The Merchant Square scheme is located in a prominent location within the central business district and is expected to command premium rents on completion to reflect the quality of finishes and prime central location. The fund’s loan will match the existing mezzanine debt and equity behind the scheme pound for pound.

Andrew Antoniades, Senior Director, CBRE Investment Advisory comments: “We are excited to be getting the Fund off to a fantastic start, well ahead of forecast. Making such a significant investment is a statement showing what the Fund is about - supporting regional growth whilst delivering exceptional leverage, outputs and returns for the Fund. We are well progressed with other exciting schemes within and outside Belfast and remain very much open for more applications.

Hugh Widdis, Permanent Secretary, Northern Ireland Department of Finance added: “Today’s announcement of the Merchant Square development sees the first project investment from the £100 million Northern Ireland Investment Fund. This first project loan demonstrates the Northern Ireland Investment Fund’s positive impact and future potential in terms of facilitating private sector-led regeneration here. I look forward to further announcements in the time ahead on project loans being confirmed to stimulate additional economic growth and jobs”.