European funds spend €72m on Dublin shopping centres

Two European funds are in the process of buying three Dublin shopping centres anchored by SuperValu for more than €72 million.

The sales underline the continuing demand by overseas investors for prime retail and office investments in the city.

The European Retail Fund has emerged as the top bidder for Lucan Shopping Centre in west Dublin at about €47 million – €7 million above the guide price – after intense bidding between Irish and overseas companies.

The yield will be about 5.5 per cent.

Two further SuperValu stores at Ranelagh Road in Ranelagh and Highfield Road in Rathgar are being purchased by the German real estate fund Patrizia for a combined figure of €25 million – €1 million over the guide.

The yield in this case will be about 5.9 per cent.

A fourth retail investment, Kilbarry Shopping Centre in Kilbarry, Co Waterford, with an asking price of €16 million, is still under negotiation between interested parties and Savills who are handling the sales.

The four shopping facilities originally formed part of a loan portfolio known as Project Aspen sold by Nama in 2013 for less than the €200 million asking price on behalf of investors David Courtney, Gerry O'Reilly and Terence Sweeney.

After acquiring the collection at a discount of around 75 per cent, Starwood Capital, along with two other investment groups, Key Capital and Catalyst Capital, managed to negotiate an extension of the rental arrangements with the Musgrave Group, owners of SuperValu.

The Lucan neighbourhood centre dates from 1991 and has a floor area of 12,008sq m (129,252sq ft).

Trading alongside SuperValu is Dunnes Stores which holds a long leasehold on its premises at a nominal rent. SuperValu underpins 59 per cent of the rent roll which stands at €2,695,934.

There is a weighted average lease period to run of 11.8 years.

Notable occupiers

Other notable occupiers of the Lucan centre include McDonald's and Starbucks.

SuperValu in Ranelagh trades successfully despite tight parking restrictions on the adjoining streets.

The ground floor convenience store extends to 928sq m (9,987sq ft) and along with a rented gym on the upper floor is producing a rent roll of €738,255.

In Rathgar, the SuperValu store has an even bigger mix of tenants at the busy crossroads of Rathgar Road, Terenure Road, Orwell Road and Highfield Road.

The 2,396sq m (25,791sq ft) complex has retail on the ground floor with a mixture of offices and 12 apartments on the upper floors.

There is a vacant site to the rear and a standalone two-storey building rented by Runzone and Accounts Assist.

The business is producing rents of €748,080 and leases have more than 18 years to run.

The Patrizia fund surfaced in Dublin last March when it paid in the region of €140 million for The Oval office development at Shelbourne Road in Ballsbridge.

The high quality scheme is producing a rent roll of €7.4 million, giving the fund a return of more than 5 per cent.