€24 million for largest cinema in Ireland

Ireland’s largest cinema complex, Cineworld, in Parnell Street, Dublin 1, is to be offered for sale as an investment on the Irish and European markets for €24 million.

If that figure is achieved, it will show a net initial yield of 7.58 per cent after allowing for standard purchaser's costs, according to agent Max Reilly of Jones Lang LaSalle.

The cinema and leisure complex has 17 screens in all, with a total of 3,360 seats at four different levels.

It is one of the top five performing cinemas in the UK and Ireland with an estimated 1.4 million visits last year.

It is operated by Aldelphi- Carlton Ltd, an Irish subsidiary of the UK-based Cineworld Group plc, which had a turnover of €13.5 million and a profit of around €2 million after paying the rent but before interest, tax and depreciation on its Dublin operation in 2011.

The Parnell Street cinema produces a rent of €1.9 million a year for two groups of Irish investors who bought it in 1998 when it carried sought-after tax allowances.

With the tax breaks now exhausted, the two consortia of around 22 investors have decided to avail of the buoyant investment market to offload the city-centre property.

A rent review for about half of the cinema remains outstanding. The property has an average unexpired lease term of about 13.2 years.

Kieran Gaughan of Wealth & Property Solutions (Waps), adviser to the Everest, one of the owners, said cinema complexes were in strong demand from institutional and larger buyers because of the stable income and the fact that they were less impacted by recessions.

BDO is advising the Parnell consortium.

First large sale
Cineworld is the first large cinema complex to be offered for sale in Ireland and comes as the owners of the St Stephen's Green Shopping Centre are gearing up to develop 10 cinemas on the roof of that under-performing complex at a cost of €10 million.

It will be the first multi-cinema development of its size in the south inner city.

Cineworld accounts for 49 per cent of all cinema screens in Dublin and extends to 10,962sq m (118,000sq ft) over four floors.

It has access to a 500-space basement car park which is being sold by receivers for Danske Bank.

The cinema complex includes a 1,300sq m (14,000sq ft) basement which has just been let to a leisure operator at a stepped rent of €60,000, rising to €70,000 after three years.

There is also the original 287sq m (3,100sq ft) foyer on the ground floor which is vacant.

Five substantial retail units fronting on to Parnell Street and backing on to an inner mall, owned by the centre developer, Belfast-based Peter Curistan, were put into receivership in 2010 at the request of the former Anglo Irish Bank.

Four of the units are estimated to be producing a rental income of around €350,000 per annum while the fifth remains vacant.

The Parnell complex had 10 screens when it opened as the Virgin Cinema in 1998.

It later traded as UGC and then as Cineworld and, in 2002, it was extended and refurbished at a cost of €15 million when seven additional screens were added along with a new foyer, bar and concessions area.

Cinema-going
Ireland has one of the highest per capital cinema attendances in the world. This year cinema visits nationally are expected to reach 15.4 million, slightly up on 2012. The market peaked in 2007 with over 17 million visits.