Prime Grafton Street retail portfolio for €40m

A multi-let block of retail buildings including Hickey's Pharmacy at the junction of Grafton Street and Duke Street in Dublin city centre is to be offered for sale through the Savills agency at a guide price of €40 million.

The portfolio was assembled by property developer Ronan McNamee, one of the two founders of the Dublin bakery Cuisine de France which was sold in 1997 for €51 million. He is now a substantial investor in commercial property in Dublin and London.

What is to be marketed as the “Grafton Collection” is currently producing a rent roll of €1.95 million which will give the next owner a net initial yield of 4.62 per cent.

Domhnaill O’Sullivan of Savills is planning to offer the range of properties in one or two lots. Lot 1, priced at €28 million, will include four adjoining buildings at 21-23 Grafton Street and 24 Duke Street, which will show a net return of 4.46 per cent.

The centrepiece of the investment is a four-storey over basement block extending to 710sq m (7,642sq ft) with retail use at ground and basement levels and office units on the upper levels.

Main tenants

The Irish-owned Hickey’s Pharmacy group are the main tenants, paying a rent of €525,000 per annum for 21 Grafton Street. The long-running Fields Jewellers are contributing €445,000 in rent for number 22 Grafton Street, while Claire’s Accessories are in number 23 Grafton Street, paying a rent of €285,000 for a four-storey over basement building with about 300sq m (3,229sq ft).

Overhead, a recruitment company, Kelly Services, has occupied much of the office space for many years and currently pays a rent of €65,000. Also included in the sale is 24 Duke Street, a retail building with an overall floor area of 154sq m (1,657sq ft), which is currently vacant but expected to lease in the short term at more than €150,000 per annum. It was previously rented by Feraud Menswear. The overall rent roll from Lot 1 presently stands at €1,326,000,

Savills is guiding €12 million for Lot 2 which includes the multi-let former Creation Arcade, now a three-storey enclave extending to 1,199sq m (12,906sq ft) with frontage on to Duke Street, Lemon Street and Duke Lane. The current rent of €625,000 will show an initial yield of 4.99 per cent.

The new facilities are let to Nespresso, Ireland’s first standalone store specialising in coffee, coffee capsules, machines and accessories. Its rent of €355,000 per annum is due to rise to €400,000 in July 2019.

Accommodate

The same building is currently being fitted out to accommodate the Hyde restaurant which will be run by Mike Ormond and Ian Redmond who have been operating food and beverage outlets at Dublin Airport since 2009. They will be joined in this venture by John McCaffrey who previously ran the Pembroke Bar and Restaurant in Dublin 2. The Hyde will have access from Duke Street and Lemon Street.

With an increasing interest in amalgamating some of the smaller stores on Grafton Street to create larger trading outlets, the new owner of Lot 1 will have planning approval until 2021 to merge the three adjoining properties on Grafton Street to enhance the overall value of the portfolio.

Mr O’Sullivan said Savills were expecting strong interest in the Grafton Collection from institutional investors who continued to pursue high street assets.

The portfolio offered high profile assets on Ireland’s premier high street with an evolving retail sector and an increase in occupier demand. Grafton Street was witnessing a strong rental growth making it a number one choice for investors, he said.