The country's largest pension fund has bought the Marathon Sports store on Dublin's Grafton Street for slightly over £6 million (€7.62m), bringing to five the number of investments it now holds on the street.
The latest purchase by the Irish Pension Fund Property Unit Trust (IPFPUT) comes less than two months after it paid more than £8.5 million (€10.79m ) for the First Active Building at the bottom of Grafton Street.
The branch office has since been leased back to the bank on a long-term basis.
The 17,000 sq ft building, near the Ballymount interchange on the M50, is now used as headquarters of Champion Sports- which acquired the Marathon business at the end of 1999. The building is rented to the group at £5.25 (€6.67) per sq ft.
Marathon will be paying a rent of approximately £200,000 (253,950) for the newly refurbished store at 40 Grafton Street which has a retail area of 2,370 sq ft.
The rent of £235 (298.39) per sq ft is well below the projected Zone A level of at least £275 (349.18) per sq ft which is expected to apply on the street before the end of the year.
The Marathon rent is due to be reviewed in exactly three years. For that reason IPFPUT will have to settle for an initial yield of 3.1 per cent (a record for the street) and an equivalent yield of 3.7 per cent.
The shop is located along a particularly good pitch opposite Chatham Street.
According to Niall Gaffney, investment manager of IPFPUT, one of their key investment objectives for 2001 was to consolidate their retail holdings, particularly on Grafton Street and Henry Street, after buying the First Active building earlier this year.
He said the trust expected strong medium-term performance for its holdings on Grafton Street and was extremely well-positioned to capitalise on the anticipated growth prospects in the retail sector of the Irish market.
Like other funds which have invested in Grafton Street over the years, IPFPUT has done exceedingly well from . It is now worth close to £5 million (6.35m).
The two Marathon investments now being sold were owned by the Curran Trust, set up by Michael Curran who founded Marathon Sports. The trust also owns shops in Henry Street and Cruises Street in Limerick.
Mr Curran, who was advised by John Costello of Costello Commercial, has done well on the Grafton Street store. He originally acquired the leasehold for the front of the building about 14 years ago for £175,000.
He later paid £200,000 for the lease of a single-storey section which had traded as an Italian restaurant. About nine years ago he acquired the freehold of the entire site for £3.2 million. Quinn Agnew advised IPFPUT.
