US-based investment manager Marathon buys retail parks portfolio for €155m

The New York-based Marathon Asset Management has bought five retail parks including the first phase of Carrickmines Retail Park in south Dublin for a figure in excess of €155 million – a long way from the €110 million guideline set by Nama.

The aggressive pricing by mainly overseas funds underlines the recovery in values and the heightened competition expected for the remaining distressed assets to be sold.

Last July Marathon also paid about €120 million for loans associated with Heuston South Quarter beside Heuston Station in Dublin which were offloaded by the Lloyds Banking Group. The parks portfolio marketed by DTZ Sherry FitzGerald and CBRE is currently producing an overall rental income of €9.5 million which will give the new owners an immediate return of 5.8 per cent. It is generally agreed that the yield can be substantially improved through better asset management.

It is also accepted that The Park in Carrickmines is in a different league to the other parks, accounting for more than €60 million of the initial valuations produced by the selling agents. The first phase of the development was bought in 2007 for a reported €100 million by the property developer Liam Maye, also one of the owners of the Dundrum Town Centre, who died unexpectedly in May, 2008.

The Carrickmines investment is producing a rental income of €4.4 million from eight retail units with potential to increase the rent roll once a tenant is found for a building extending to 974 sq m (10,500 sq ft).

Woodies DIY is the anchor tenant here as well as in three of the other retail parks paying a rent of €1.8 million for 6,038 sq m (65,000 sq ft). The other traders are PC World who are paying €620,000; Smyths Toys (€530,000); Currys (€530,000); Next (€400,000); along with Halfords, Hickeys Fabrics and 53 Degrees North. The overall floor area runs to 18,874sq m (203,170sq ft). Phase 2 of the park, which is not included in the sale, also has a strong tenant lineup that includes TK Maxx, Heatons, Mothercare and Harvey Norman.

Rent roll

The MI Retail Park, one of two large parks on the outskirts of Drogheda, was developed by businessman Paddy Doyle and has 23,985sq m (258,188sq ft) of retail warehousing, offices, leisure and restaurant facilities. All but one retail unit extending to 1,579sq m (17,000sq ft) are occupied and producing a rent roll of €2.8 million. Woodies accounts for €1 million while Smyths Toys contributes €220,000. The guide price of €25 million, set by the selling agents, includes an adjacent 31 acres which are zoned for development. However, with Drogheda on its knees after the recession there is no talk of any significant developments for the foreseeable future.

Lakepoint Retail €8 million before it went on the market, was one of the first retail parks outside Dublin when it opened for business in 2001. It is now producing a rent roll of €772,000 from a range of buildings which are about 75 per cent let and have an average lease term to run of just over 11 years. Woodies is again the anchor in the park which benefits greatly from its close proximity to the IMC Cinemas.

The selling agents are believed to have suggested a valuation of over €12 million on Poppyfield in Clonmel which is producing a rental income of €1,198,000. Woodies pays €560,000 for a store with a floor areas of 3,901sq m (42,000 sq ft). Super Valu contributes a further €156,000 while Harry Corry pays €120,000. Other traders include Carphone Warehouse, Meteor Mobile and Sam McCauley Chemist.

Four Lakes Retail Park on the outskirts of Carlow town has few tenants after being launched just as the property market collapsed in 2008. Four of the eight buildings on site are let to PC World, Maxi Zoo and Cost Plus Sofa while a fast-food outlet is rented by Supermacs. The overall rent roll is €323,521.