Cosgrave buys London mall for £281m

Cosgrave Property Group, the Dublin-based developer, has bought a shopping centre in Romford, east London, for £281 million (€412.68 million). The Liberty centre deal, Cosgrave's third in Britain, brings its expenditure there since the start of the year to some £500 million.

The 391,000 sq ft centre was built in 1968 and refurbished in 2003 at a cost of £53 million. Two office buildings and an 800-space car park are included in the deal. The anchor tenants are Marks & Spencer and Debenham's.

The seller was the publicly-quoted property group Hammerson, a significant shopping centre investor, which also owns London's Brent Cross and Birmingham's Bullring centres.

Hammerson said the book value of the Liberty was £229 million. Romford was projected to generate a net rental income of about £10 million this year, Hammerson said.

Cosgrave adviser Fergus Keane, of CB Richard Ellis in London, said that about half the rental income at the centre was secured for 10 years.

The centre had a rental yield of 4.65 per cent at present, he said. The strong likelihood that rent reviews now under way would result in rent increases meant the Romford deal had an "equivalent yield" of 5 per cent.

Mr Keane made light of the nearby development of the 750,000 sq ft Stratford centre, which will be close to the site of the stadium for the 2012 Olympics Games. "Is Stratford going to hurt the West End? No. Is it going to hurt Romford? No."

He said the centre would be well placed take advantage of the London Olympics as well as the Thames Gateway urban regeneration initiative. Given that the shopping centre is only one-storey high, there was a clear possibility to build residential or office blocks above the original site. "We know we can extend it," he said.

A leading developer of residential and office buildings in the domestic market, Cosgrave made its first foray into Britain in January with the £80 million purchase of the Caxtongate retail buildings in Birmingham. In March, the group bought the Jubilee House retail block and West End House office building near Oxford Circus in London from Prudential for £136 million.

It is believed that the Romford deal was financed by Ulster Bank and its parent Royal Bank of Scotland.

Even after this transaction, the group is said to looking for further opportunities in the British market. Irish money has flooded into British commercial property, with groups such as Quinlan Private and Dublin solicitor Brian O'Donnell prominent among the larger investors.

The Cosgrave group was set up in the late 1970s by the Jack Cosgrave, who died in 2004. Three of his sons - Peter, Joe and Michael - and a daughter, Helen, run the business today.

In addition to numerous residential developments, the group owns the Westgate retail development at Blanchardstown in west Dublin and the landmark George's Quay office block in the city centre. It also owns the 150-room Radisson St Helen's Hotel at Booterstown, south of the city.

Consolidated financial statements for the Cosgrave group are not publicly available. While Companies Office filings say the ultimate parent company in the group is an unlimited Irish entity called Genstar, the group also operates through an Isle of Man-based company called Waterpool and an unlimited Irish company called Borg Developments.

The business grew from the purchase in 1979 of five housing sites in Stillorgan from former former developer Patrick Gallagher.