BUSINESS consortium has paid almost £4 million for most of the developed Market Cross Shopping Centre in Clonmel, Co Tipperary. The deal will give them a valuable tax shelter on top of a yield of around 8 per cent.
The purchase will allow Town and County and Kent Property to withdraw from the centre, which is largely unlet more than 20 months after the anchor tenant, Superquinn, opened for business.
The portfolio comprises 25 shops, of which only three are let at a rent roll of £71,000. However, Town and County and Kent are to underwrite a rent of £361,000 per annum for all the shops for a period of up to four years.
Anthuan Xavier, of accountants BDO Simpson Xavier, negotiated the purchase on behalf of five investors who will be able to claim capital allowances covering 84 per cent of the purchase price. Because the deal was completed before the end of the last tax year, the new owners will be able to claim an initial allowance of 54 per cent and the balance at 4 per cent per annum.
Edmund Douglas of agents Douglas Newman Good acted for the vendors.
The new owners are expected to preserve the double rent allowances for tenants by completing a leasing agreement with a separate company and then assigning the leases to traders as they move in. Otherwise, the double rent allowances available under the urban renewal tax designated scheme would run out at the end of July.
Ed Douglas says that with the core traders either open for business or about to move in, he expected to have another eight stores inspiration by Christmas.
There are 32 shops altogether Market Cross, of which 10 have been let and seven have been sold. These comprise a newsagent, chemist, optician, hairdresser, music store, fashion accessory and gift shop.
Mr Douglas said the pace of letting is expected to quicken when a restaurant, hairdressers (Peter Mark) and pharmacy open shortly, giving a critical mass of traders. Negotiations are at an advanced stage on a number of the unlet shops.
The three units let which are included in the portfolio are occupied by Present Time Gift Shop at a rent of £27,000 Mary Rose Cafe at a rent of £32,000 and Joys Pharmacy at £12,000.
The Market Place development has been beset by problems from the start. Shortly after Superquinn opened its circular style supermarket, Town and County decided to slow down the development programme because of local problems. Clonmel's economy took a hammering when Digital went out of business with a loss of 300 jobs. Around the same time, Kent Corporation (which held a 50 per cent stake in Market Place) ran into difficulties. To make matters worse the centre was in direct competition for traders with two larger regional shopping centres in Waterford and Kilkenny.
Digital's departure has since been overshadowed by the arrival of the computer disc drive manufacturer, Seagate Technology, which has taken over the Digital plant and is expanding fast.
With the retail market in the provinces fast recovering, Dougalas Newman Good and local agents P.F. Quirke have produced a marketing strategy for the Clonmel centre which they believe will see it fill up steadily over the next two years.
The lengthy period it has taken to establish the centre would have created serious problems for most developers but Town and County was able to retain ownership of it simply because the company is controlled by nine life assurance companies and three banks.
Town and County was set up in 1990 with funds of £10 million to develop a retail portfolio in the provinces.
