Six more Irish shopping centres are to be offered for sale in a single lot by Lloyds Banking in a further move to recover some of the development loans granted by its defunct Bank of Scotland Ireland.
Joint agents Savills and Bannon are quoting €120 million for shopping centres at Douglas in Cork; Quayside in Sligo town; Bloomfields in Dún Laoghaire, Co Dublin; The Mill in Clondalkin, Dublin 22; Kilbarrack in Dublin 5; and Dundalk Retail Park in Co Louth.
The sale will also include a rented three-storey office building in Clondalkin and 30 acres of development land adjoining Dundalk Retail Park. The overall portfolio has around 170 tenants in all and includes 3,600 car-parking spaces in the seven different locations. The overall weighted average period remaining on the leases is over eight years.
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Lloyds has already appointed receivers to the properties in the Spectrum Portfolio which are currently producing a rental income of around €11 million.
At that return, the seven investments will show a net initial yield of almost 9 per cent. The sale is expected to be of interest to many of the overseas equity firms as well as to the Irish Reit (real estate investment trust) companies because of the opportunity to gain a significant foothold in the Irish retail market at a time when it is showing signs of bouncing back for the first time since 2006.
Supporting this view, joint agents Roderick Nowlan of Bannon and Fergus O'Farrell of Savills are convinced that the retail sector is reaching a turning point. Retail sales are steadily increasing, there is an improved labour market and the prospects of more neutral budgets are now feeding through to the retail economy. They expect strong interest in the portfolio because of the diverse collection of assets on offer and its exposure to all sectors of the retail market.
Over €70 million of the portfolio’s €120 million guide price is accounted for by its two main assets, Douglas Shopping Centre and Dundalk Retail Park.
Douglas is owned by the Love family's Shipton Group which also recently saw its large shopping centre at Blackpool in Cork sold by Nama as part of a larger portfolio. Douglas has been in receivership since July, 2012, because of Bank of Scotland Ireland debts believed to be around €80 million.
The 15,596sq m (167,884sq ft) centre has a rental income of €3.9 million from 50 stores and kiosks including anchor tenant Dunnes Stores who lease their premises, as well as New Look, Boots and Next. The centre is 94 per cent let and has 950 car-parking spaces.
Dundalk Retail Park on the outskirts of the town has 20 retail warehouses with an overall floor area of 21,578sq m (223,276sq ft) along with an industrial building and a fast food outlet. The tenants include Woodies, Currys, Homestore & More, Smyths Toys and KFC. Rental income comes to an impressive €2.67 million.
Three Dublin grocery based schemes and a State let office block make up about €30 million of the portfolio with diverse locations such as Kilbarrack (north Dublin), Clondalkin (west Dublin) and Dún Laoghaire (south Dublin).
Dunnes anchor The Mill in Clondalkin where there are 30 retail units in all including key traders Boots, Lloyds Pharmacy and Carphone Warehouse. The 12,801sq m (137,800sq ft) of retail space in The Mill is fully occupied and is producing a rental income of €1.29 million.
The Mill and Bloomfields in Dún Laoghaire were both originally controlled by Liam Carroll's Zoe Developments. Bloomfields is anchored by Tesco and has an overall floor area of 11,148sq m (120,000sq ft) divided between anchor and the other traders as well as the IMC Cinema. The rent roll in this case is €852,222.
Around 96 per cent of the retail space in Kilbarrack shopping centre is already occupied, notably by Tesco, Ladbrokes and Pizza Hut. The car park also includes a petrol station. The centre has a passing rent of €721,000.
The final part of the retail portfolio involves town centre retailing in the form of Quayside shopping centre in Sligo. The scheme has a rent roll of €1,289,100 from a two-level scheme which is integrated into Sligo town as well as a basement car park. Around 70 per cent of the retail space is included in the sale in addition to the 400-space car park. The centre extends to 12,727sq m (137,000sq ft) and has several key tenants including TK Maxx, Next, River Island, Monsoon and Oasis.
The three-storey modern office building and 94 car parking spaces beside The Mill shopping centre in Clondalkin is currently producing a rent of €451,531 from Dublin City Council and the OPW. The lease has another five years to run.
