Shops likely to be amalgamted into a larger retail unit once receivers find a suitable buyer

Two adjoining retail buildings near the bottom of Dublin’s Grafton Street are to be offered for sale at €3.8 million as AIB moves to recover borrowings made to the owner of the distressed properties.

A purchaser may well amalgamate the two buildings because of the strong preference for larger floorplates.

Previous occupant

Number 117 was previously occupied by pipes and cigar specialist Peterson of Dublin which recently relocated to nearby Nassau Street while number 118 was rented for many years by the UK travel agent Thomas Cook.

Commercial agent CBRE is handling the sale of the two vacant buildings on the instructions of Michael Cotter and Luke Charlton of Ernst Young who were appointed joint statutory receivers by AIB. The buildings may be sold individually.

Natalie Brennan of CBRE estimates that when let the two buildings should be producing a combined rent of €250,000 to €270,000.

Newly fixed rents on the street have declined by anything up to 50 per cent since the property market collapsed in 2008.

Significant sale

The sale comes a week after two other adjoining shops near the bottom of Grafton Street were sold for just over €40 million, a full 65 per cent less than the €115 million paid for them in 2007 by property developer David Daly.

The River Island and Wallis shops were acquired by German fund manager GLL Real Estate.

It purchased the properties not only because they are among the best on the street but also because they are let at a combined rent of almost €3 million which is unlikely to be reduced as each of the two long leases provide for upwards-only reviews.

Since that sale was completed, it has emerged that GLL’s main competitor for the investment was none other that River Island, the investment vehicle of the billionaire Lewis family.

Declan Stone of Colliers who advised the Lewis company said the price achieved was all the more surprising because the two shops were over-rented by at least 50 per cent.

In any event, GLL can bank on an immediate return of 6.85 per cent. They are already getting a yield of 6 per cent on the adjoining AIB branch which they bought three years ago for €28 million.

All this is a long way from the CBRE campaign to find a buyer for 117 and 118 Grafton Street which have an overall floor space of 475.5sq m (5,120sq ft) over five levels. The two buildings would have a combined 111sq m (1,200sq ft) at street level if amalgamated.

If a single purchaser does not emerge for the two properties, the selling agents will then offer them for sale separately. Number 117 has a total floor area of 73.2sq m (788sq ft) at ground floor and basement level. Number 118 is considerably larger with 402.5sq m (4,332sq ft) in all including retail use at ground and first floor levels.

Natalie Brennan said the lot size would appeal to a larger number of Irish investors but the sale was equally likely to attract interest from overseas investors who were responsible for 70 per cent of the investment spend in 2012.