Retail InvestmentsThe owners of a retail portfolio at Castle Market in Dublin 2 are likely to more than double their money in four years, writes Jack Fagan

The property developer Bernard McNamara has bought a large chunk of Castle Market, the Victorian shopping enclave which links South William Street with Drury Street in Dublin city centre.

Ben Pearson of Boogle Estates said it had been decided to sell one side of the street to a "private investor" and to break up the remainder of the portfolio to maximise the overall selling price.

This will allow owners Francis Rhatigan and Chris Jones of Ellier Developments to more than double their money in four years. They bought the street from Green Property Co for €13 million and are on target to offload it for over €33 million. Peter Browne of Davin is the joint agent on the sale.

Bernard McNamara is widely believed to be the "private investor" who paid around €12 million for five adjoining retail buildings on one side of the pedestrianised street in a deal which will show an initial yield of only 1.68 per cent.

However, when rents are reviewed, the return will rise to 2.75 per cent.

McNamara has been the most active purchaser of Dublin property in recent years, recently paying €288 million for the 3.8-acre Burlington Hotel, and teaming up with the Dublin Docklands Development Authority and the financier Derek Quinlan to pay €412 million for the 24-acre Glass Bottle site at Ringsend.

McNamara's company is one of three or four actively assembling property portfolios in the retail areas between Grafton Street and South Great George's Street.

Unlike other areas, Castle Market is unlikely to change much, given that the Victorian buildings are listed for preservation.

Traders would nevertheless welcome an upgrading of the street on the lines of the refurbishment already carried out on the Helen McAlinden store at the junction of Castle Market and Drury Street.

The five buildings acquired by McNamara include Costume where a rent review in October is expected to see the rent rise from €60,500 to €106,359.

Next door, Crown Jewels is also facing a rent review within weeks. The current rent of €33,500 is due to be increased to €59,626.

Next month will also signal a rent review for the adjoining Harlequin fashion shop.

The selling agent has indicated that the rent in this case should rise from €42,000 to €70,696.

Next door the operators of the Murphy Sheehy & Co will not have to face a rent review until April 2008 when the agents have forecast that the rent will go from €38,500 to €56,210. The chic patisserie, Maison des Gourmets, is expected to see its rent rise from €47,500 to €65,709 when reviewed in 2010.

McNamara was not the only one settling for a low yield to buy in almost half of Castle Market.

A private investor paid €4.78 million for the Helen McAlinden store which is rented at €160,000 per annum. It will show a yield of 3 per cent.

Another private investor went even further, buying Cookes restaurant on the opposite end of the Castle Market for €5.8 million.

The initial yield of 1.86 per cent will move to 2.75 per cent when the rent has been reviewed. Cookes' current rent of €116,855 is paid under two leases and, with the main review due next month and another one pencilled in for September 2008, the agents expect the overall rent to move to €205,253.

The owners of Rohu Furs availed of the opportunity to buy in the freehold of their long standing premises, paying €4.35 million before their rent is due to double to €138,480. The initial yield here is also a modest 1.5 per cent.

Several offers were made for the two other individual buildings in the portfolio, The Bistro Restaurant and Blazing Salads, but at the time of writing they were still available.

The vendors are seeking €4.5 million for The Bistro which is presently paying a rent of €82,950.

This is expected to move up to €152,121 when one lease is reviewed immediately and the other one is looked at in 12 months time.

A price of €2.25 million is being sought for Blazing Salads which is rented at €52,000 per annum. The next rent review is not due till 2011.