Rathfarnham centre in £14m portfolio sold by Doyle group

The Doyle Hotel Group has sold Rathfarnham Shopping Centre in Dublin 14, and three industrial investments in west Dublin for a total of £14 million. A business consortium, which paid almost £10 million for the shopping centre, will earn a net initial yield of 7.25 per cent on the investment.

Bank of Ireland Asset Managers will get an initial return of 8.75 per cent on the industrial portfolio, which has long-term redevelopment potential. The new owners of the shopping centre plan to spend more than £6 million on upgrading and enlarging the complex, which was developed by the late P.V. Doyle in 1965.

An additional 20,000 sq ft of space is to be added on two levels, with the intention of attracting a key UK multiple.

The Rathfarnham centre is currently producing almost £903,000 from 35 shop units, which are rented at £27 per sq ft. Tesco owns both of the anchor stores - Quinnsworth, which trades successfully out of a 37,000 sq ft supermarket, and Penneys, which has a unit of 12,000 sq ft.

Bank of Ireland and the ESB are the best-known companies occupying units in the centre.

Although retail investments are scarce in the Dublin market, there was only a small number of players interested in the Rathfarnham centre, largely because of the continuing development and enlargement of other shopping centres in Dublin.

Another drawback was that the owners of the Rathfarnham centre must meet service charges out of the rent roll. Under this unusual arrangement, the owners had to forfeit £110,000 of their annual rent to meet service charges such as insurance, rates, maintenance and security.

Responsibility for the service charges rests with the owners until the old leases run out in the year 2005.

The Doyle family have a majority stake in Cranford Holdings, which owned Rathfarnham Shopping Centre. Other shareholders were National Irish Bank with 20 per cent of the equity and the Hastings family, with a stake of about 20 per cent.

Ian French of Hamilton Osborne King handled the sale of the shopping centre and the industrial units. John McNally of McNally Handy advised the purchasers of the shopping centre and Ann Hargaden of Lisney advised Bank of Ireland Asset Management.

The industrial portfolio is producing a combined income of £387,600, which is likely to increase significantly over the next few years. The largest investment, Concorde Industrial Estate overlooking the Naas dual carriageway, is currently producing £258,000 from 92,000 sq ft of high quality buildings and 130 car-parking spaces. Koping Motors is the best-known tenant in the centre, which is rented at an average of £2.80 per sq ft.

The sale also includes two large units at Cookstown Industrial Estate, off the Belgard Road, in west Dublin, which will be greatly enhanced by the opening of a new road between Belgard Road and Tallaght Hospital.

One of these units with a floor area of 17,725 sq ft is rented to Armitage Shanks at £48,000 per annum. The company is apparently hoping to assign its 35year lease on the premises, which dates from 1982. The second unit of 27,000 sq ft is rented by Kirkley Tyres under a 25-year lease from 1960 at £81,600 per annum.

With the Concorde building located along the busy Naas dual carriageway, Bank of Ireland Asset Managers will obviously look at the possibility of redeveloping the premises as a retail warehouse scheme.