Burger King building sets new Grafton Street yield benchmark

Two years ago, the Investment Bank of Ireland paid £5 million for the Bewley's cafe at 78/79 Grafton Street in a deal which showed a return of 5.2 per cent. A year earlier, a Dublin businessman bought the Pia Bang store at 46 Grafton Street for £1.7 million, representing a yield of 5.25 per cent.

A new benchmark in investment yields has been set in Dublin's Grafton Street with the sale of a retail building occupied by Burger King for around £3.4 million.

The price equates to a yield of 3.4 per cent, easily the lowest in the street. The building was bought by the OKR Group, which rents the Grafton Street premises and operates the Burger King franchise in Ireland. Now that it controls the building, the OKR Group has the option at any time of selling the freehold at an enhanced value and using the profit to further develop its business.

Ann Hargaden of Lisney, who handled the sale for a family trust, said there was "little or nothing" between the top bidders for the building.

It is understood that three of the seven tenders came from institutions. The under-bidder was also an institution.

Michael Harrington of Palmer McCormack advised the OKR group, which had a sharply increased turnover of £8.36 million in the year ending December, 1995.

Lisney marketed the Burger King premises on the basis that it is under rented at £120,000 per annum. The rent works out at £150 per square foot, considerably below the £190 recently agreed for both Thorntons and McDonald's on the same street.

Grafton Street yields have been slipping since 1994 but only one previous sale dropped below the 5 per cent mark. In May, 1995, UK fashion multiple Warehouse paid marginally over £2 million for the store it occupies at 37 Grafton Street at a rent of £112,000 per annum. The yield works out at 4.9 per cent. In 1989, Norwich Union had to settle for an initial yield of 3.7 per cent when it bought the small Tie Rack store in Grafton Street but with a rent review in the offing, the equivalent return was 4.5 per cent.

Two years ago, the Investment Bank of Ireland paid £5 million for the Bewley's cafe at 78/79 Grafton Street in a deal which showed a return of 5.2 per cent. A year earlier, a Dublin businessman bought the Pia Bang store at 46 Grafton Street for £1.7 million, representing a yield of 5.25 per cent.

Number 39 Grafton Street is let to the OKR group under a long lease which provides for a rent review in the year 2000. The building has a floor area of 5,408 square feet, including 3,581 at ground and basement levels. The three upper floors are used as offices by the OKR Group.