€123m for high-end retail and office portfolio

Some of the most interesting retail investments to come on the market in Dublin this year including a block of five shops on Henry Street, JD Sports on Mary Street and Carluccio's restaurant on Dawson Street, are included in a portfolio of properties to be offered for sale today on behalf of Bank of Ireland.

Agents CBRE and Savills are guiding €123.4 million for the eight top-class properties which are likely to be of interest to most of the overseas funds, the REIT companies as well as IPUT, Irish Life and a small number of wealthy individuals.

The collection includes a mixture of high street and suburban retail investments and two city office blocks, all of them generating an overall rental income of €7.3 million.

Around 60 per cent of the rent roll comes from the retail tenants with the balance being contributed by firms occupying the offices.

The weighted unexpired term works out at 8.22 years and about 2,415sq m (26,000 sq ft) of the overall space of 30,657sq m (330,000sq ft) is currently vacant, allowing the new owners the scope to increase the rental income. Investors will have the option of bidding on the entire portfolio or on individual assets.

The initial return on the full eight properties will be 5.65 per cent with the average capital value working out at €4,014 per sq m (€373 per sq ft). Interested parties will be aware that the office market is continuing to experience strong growth while the retail sector has finally stabilised.

Henry Street

The joint agents are quoting €26 million for a block of five shops at 18-21 Henry Street and 6-8 GPO Arcade which are rented at €1.41 million, equating to a net initial yield of 5.19 per cent.

The shops have an overall floor area of 2,914sq m (31,370 sq ft) and are occupied by HMV, Vision Express, Boots, Stars & Stripes and Tiger. The unexpired lease terms average 5.25 years. The five shops were bought more than a decade ago by the Arnotts Pension Fund for a figure believed to be have been in excess of €50 million.

Mary Street

The JD Sports building at 43/44 Mary Street is valued at €14.5 million, a price which will show a net return of 5.6 per cent. The tenant is paying a rent of €820,000 for the three-storey building which has an overall floor area of 1,158sq m (12,472sq ft) and open-plan retail space on the ground and first floors.

There is a further 11.2 years remaining on the lease. An additional income of €25,235 per annum comes from an ATM operated by AIB. The store is located next to Penneys and directly opposite the entrance to Jervis Street shopping centre. It has been owned in recent years by the businessman Liam Smith of Clyde Road in Ballsbridge.

Carluccio’s occupies a prominent pitch on the corner of Dawson Street and Duke Street and is valued at €5 million – a long way short of the €12 million believed to have been paid for it by a group of investors assembled by D2 Private at the tip top of the property boom. Carluccio’s originally paid a rent of €680,000 for the four-storey over basement building with a floor area of 575sq m (6,193sq ft).

This did not prove sustainable and the 120-seater restaurant closed for a week before the rent was renegotiated down to its present level of €287,500.

There is an additional income of €13,000 from a roof mast operated by 02. Carluccio’s 20-year lease from 2007 is guaranteed by the parent company. The €5 million quoting price would show a yield of 5.75 per cent.

There is also likely to be any number of investors interested in pitching for the Tesco supermarket at 17-23 Upper Rathmines Road in Dublin 6, which is producing a rent of €440,000 under a lease which runs until 2023.

The mainly single-storey supermarket extends to 1,773sq m (19,094sq ft) and has a 70-space car park to the rear. The guide price in this instance of €7.5 million would show a yield of 5.6 per cent.

CBRE and Savills are guiding €11.9 million for the Nutgrove Centre, a successful retail complex with an overall floor area of 5,660sq m (60,934sq ft) at Nutgrove Avenue in Rathfarnham, Dublin 14.

Tenants include Lidl, Home Store and More, McDonnell Paints and Pet World. One of the retail units with a floor area of 800sq m (8,622sq ft) is currently vacant, offering potential to increase the rent which is currently €857,101.

At that figure a new owner would get an initial return of 6.9 per cent.

The Nutgrove Centre forms part of a cluster of three retail schemes which also includes the Nutgrove Shopping Centre and the Nutgrove Retail Park.

Beacon Quarter

There is also likely to be considerable interest in Beacon South Quarter, a mixed use development at Sandyford, Dublin 18, which is anchored by

Dunnes Stores

, who also own their premises.

The agents are suggesting a price of €7 million for eight retail units with an overall floor area of 4,237sq m (45,614sq ft).

Most of the shops are let to leading furniture retailers including Bo Concept, Roche Bobois, KUBE, Classic Furniture, Soul, O'Briens Fine Wines and Your Local Pharmacy.

The rent roll of €547,341 will provide a yield of 7.49 per cent. The average unexpired lease term is about 12.8 years.

The shops were bought during the boom by a group of investors led by Derek Quinlan’s investment company.

The two office investments for sale will have even greater appeal because of the high quality of the accommodation, the strong covenants and the prospects for rental growth.

Office blocks

The first block, 20 on Hatch is located on Hatch Street, close to St Stephen’s Green, and is priced at €26.2 million, reflecting a net initial yield of 4.95 per cent.

The six-storey over basement building with a floor area of 4,129sq m (44,400sq ft) is shared by two tenants, Met Life and Covidien, who pay an overall rent of €1.35 million. The leases have an average term of 3.95 years to run. The building, which comes with 17 car parking spaces, was refurbished and extended a number of years ago by solicitors Coleman Lavelle.

The second office block, Kilmore House at Spencer Dock in the north docklands, was developed by Treasury Holdings along with the PwC headquarters and the National Convention Centre. CBRE and Savills are quoting €25.3 million for a 33 per cent interest in the block which extends to 10,280sq m (110,667sq ft) and is producing an overall rent roll of €1.5 million.

There are three tenants, PwC, ABN Amro and Ecclesiastical Insurance, and a small element of vacant space extending to around 1,021sq m (11,000sq ft). The available investment will show a net return of 5.85 per cent.

Fergus O’Farrell of Savills described the portfolio as “an exceptional collection of Dublin based assets”offering investors prime opportunities on both the retail and office sectors. “Given the lot size of both the individual properties and the entire collection, along with the diversity of the assets on offer, we would expect significant interest from both national and international investors.”

Colm Luddy of CBRE said that while property collections sold in the current cycle had been sector specific this portfolio offered an opportunity to acquire a balance of prime Dublin city offices and a balanced Dublin retail holding.

On an overall basis the collection offered scale on a number of the assets but they were also likely to appeal to individual bidders.