Irish Life set to buy its 19th building on Grafton Street

Irish Life looks like strengthening its position as the largest owner of buildings on Dublin's Grafton Street with the expected purchase of its 19th retail property – the Molton Brown store – for a figure likely to be in excess of the €9 million guide price.

If the sale proceeds, No 80 Grafton Street could possibly show a net initial yield of only 2.81 per cent. However it has highly reversionary potential in the run-up to the next rent review in October 2019.

With Grafton Street again trading strongly and on course to do even better following the arrival of Victoria's Secret, there is considerable confidence that the overall return on the Molton Brown store will rise to at least 4.25 per cent.

The building is currently producing a rental income of €275,000, reflecting a Zone A rent of €4,413 per sq m (€410/sq ft), well below the standard rate of €6,996 per sq m (€650/sq ft). All six bidders chasing the Molton Brown store are understood to have lodged bids above the guide price.

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Molton Brown, a corner beauty supply store next to the newly reopened Bewley’s Cafe, has completed only three years of a 15-year lease. The building has a retail trading area of 85.03sq m (925sq ft) at street level and an overall capacity of 390.67sq m (4,205sq ft) over five floors, including the basement.

Molton Brown was set up in the UK in 1973 and was sold to the Japanese cosmetics giant Kao in 2005. The company reported pre-tax profits of £35 million in 2006.

Irish Life’s ownership of no less than 18 stores on Dublin’s principal high street in a variety of funds should allow it to amalgamate some of the adjoining buildings to facilitate big-name international traders who have been unable to find suitable premises.

The company’s representation on the street changed drastically when it bought the Sovereign Portfolio in 2015 from the former Royal Liver Assurance for €154 million. The portfolio included McDonald’s as well as Office Shoes, Health Matters, the Body Shop, Clarks Shoes and Pamela Scott fashions.