Agent HT Meagher O'Reilly is seeking in excess of €5.5 million for a retail investment at 46 Grafton Street, Dublin 2, that will give a purchaser an income return of around 7.75 per cent.
The four-storey-over-basement building is let to Hutchinson 3G Ireland Ltd, trading as 3Mobile, on a 35-year full repairing and insuring lease that commenced on January 1st, 1991, and has another 12.5 years to run. Though the premises is currently over-rented at €445,000, the rent can be reviewed only on an upwards-only basis for the remainder of the lease.
Moreover, the lease is guaranteed by Hutchinson 3G UK Holdings with an additional bank guarantee equivalent to one year’s annual rent and outgoings payable by the tenant up to a maximum of €550,000.
The building, which has been owned by an Irish family for more than 20 years, has an overall floor area of 296sq m (3,186sq ft) including 87sq m (936sq ft) at street level.
HT Meagher O'Reilly said the new restrictions applying to mobile phone shops on Grafton Street bestowed an extra trading value to number 46.
Furthermore, with more than €5.6 million in income to be collected over the remaining period of the lease, an investor would have a debt-free prime asset by the time the tenant was offered a lease renewal.
There have been a number of notable sales of buildings on Grafton Street in recent years despite the turmoil in the property industry and the fact that about 50 per cent of the buildings on the street are over-rented. Premises with market rents are generally showing yields of 6 to 7 per cent.
Fall in values
Two years ago, Joe Moran of Manor Park Homes – now in receivership – sold the former Wine Jewellers corner shop at number 33 to John Brereton Jewellers for about €5 million. The new owner subsequently spent a considerable sum on refurbishing the building.
The real extent of the fall in values on Grafton Street made headline news last February when the German fund manager GLL Real Estate paid just over €40 million for the adjoining River Island and Wallis stores near the bottom of the street – a whopping 65 per cent fall on the €115 million paid by developer David Daly in 2007.
Currently, CBRE are reporting good interest in two other adjoining – and vacant – shops at the bottom end of the street which are going for sale.
A price of €3.8 million is being sought for the two distressed properties, number 117 and 118, previously occupied by cigar specialist Peterson of Dublin and Thomas Cook.