German investor pays €22m for Grafton Street shop

Deka Immobilien snaps up premises of & Other Stories from UK-based Aviva Investors

 

Just one week after it completed the €164 million acquisition of Riverside IV, a prime office building in Dublin’s south docklands, Deka Immobilien has gone back on the acquisitions trail.

Having confined its Irish investment activity in recent years to the purchase of offices and hotels in the capital, The Irish Times understands the German investor has turned its attention to the retail sector, with an agreement to purchase the Grafton Street premises of sustainable fashion retailer, & Other Stories from UK-headquartered Aviva Investors.

While a spokesman for Aviva declined to comment on the deal, it is understood that Deka is paying in the region of €22 million including costs to secure ownership of the property. Efforts to contact Deka Immobilien for comment on the deal were unsuccessful

& Other Stories has traded from 26/27 Grafton Street since 2016. The retailer, which is one of eight brands within the H&M Group, occupies the 878 sq m premises on a 15-year lease and pays a rent of €925,000 per annum. Based on those numbers, Deka can expect to secure a yield of around 4.5 per cent.

The German investor’s decision to buy into Grafton Street will be welcomed by those invested there and by the commercial property sector more generally, coming as it does in the midst of the additional uncertainty bricks-and-mortar retail faces as a result of the Covid-19 pandemic.

News of the deal comes just four weeks after The Irish Times reported on Tommy Hilfiger’s decision to close its flagship Grafton Street store permanently.

Although the impact of the pandemic is believed to have influenced the US fashion retailer’s move to a certain degree, it is understood that the company decided to exercise the 15-year break option on its 25-year lease 12 months early.

In handing back the keys to its landlord ahead of time, Tommy Hilfiger is believed to have paid the near €1.7 million rent due for that period. The retailer has occupied the premises at 13-14 Grafton Street since 2007.

While the property has changed hands twice since then, those with an interest in the retail sector will note that it was acquired in 2009 and almost immediately after the financial crash by Deka Immobilien for about €25 million.

Having derived the benefit of seven years’ of boom-era rental income, Deka went on to secure a significant uplift on its original investment when it sold the property quietly to the Brennan family, owners of the well-known bread business, for about €35 million in 2016.