A group of private investors has agreed to pay in excess of £21 million (€26.66m) for 16 shops at The Square in Tallaght, Co Dublin, which have been owned for the past 10 years by Salix, the Bank of Ireland pension fund. The investment portfolio is expected to produce an equivalent yield of around 6 per cent.
Hamilton Osborne King is advising the consortium which is due to complete contracts in the next two weeks.
Salix, one of the original investors in The Square, has obviously done exceptionally well out of the portfolio. Apart from the strong capital growth since then, the fund also got a 40 per cent increase in rents when they were reviewed five years ago.
There are also considerable attractions for the consortium moving in, particularly the opportunity to avail of £7.4 million (€9.40m) in capital allowances which can be offset against all income. The consortium is also likely to find encouragement from the first round of rent reviews which have shown an uplift of around 60 per cent for five of the 16 shops in the portfolio. If this trend continues, then the overall rent roll of £971,217 (€1,164,629) will rise significantly from October 1st.
A Wear is the largest tenant with a unit of 8,472 sq ft. The current rent of £185,000 (€234,90) is expected to rise to £280,000 (€355,526).
The ESB's rent of £102,000 (€129,513) could move up to £170,000 (€215,860) before the end of the year. Boots is another high profile tenant which may see a doubling of its current rent of £67,500 (€84,707).
Hallmark Cards and TKO Ltd each pays a rent of £75,000 (€95,230) while Heatons accounts for £72,000 (€91,421). Dixons has three units in all rented at £101,344 (€128,680). The other tenants include Sacs, Signet Group plc, Nath Brothers, EBS and Deborah Joy Jewellery.
The portfolio covers an area of over 24,000 sq ft on three levels, of which 1,700 sq ft is storage space. The consortium will also have the option of investing in a proposed £120 million (€168m) extension to The Square.
An Bord Pleanβla has already cleared the way for a nine-storey over basement extension which will form a new shopping area to be known as The Millennium Square.
It will also have about 360 apartments, two hotels with around 50 bedrooms each, 107,000 sq ft of offices, restaurants, bars and a nightclub in the basement.
More significantly, the extension will include over 152,000 sq ft of retail space, of which 65,000 has already been committed to Penneys at a reputed selling price of around £12 million (€15.24m). There will also be an additional 1,500 car-parking spaces.
Because of the size of the extension, it is likely to be tackled in stages, with many of the apartments being sold off the plans. Others holding retail portfolios in The Square include AIB, Irish Life, Canada Life and the developer Kenny Rohan.
