While the traditional retail sector continues to evolve in response to the challenges presented by the rise in online shopping and the questions posed by the Covid-19 pandemic, the presence of two of Ireland’s most successful and resilient brands as anchors coupled with significant rental income from a strong tenant line-up is expected to attract interest from both domestic and international investors in the sale of the Marshes Shopping Centre.
The Dundalk scheme — acquired by its current owners, American real estate firm Kennedy Wilson, for €44.5 million in 2014 — is being offered to the market by joint agents CBRE and Bannon at a guide price of €33.5 million.
Anchored by a 71,600sq ft Penneys and a 116,500sq ft Dunnes Stores (grocery and drapery), the Marshes Shopping Centre has consistently delivered robust trading and occupancy levels and proved resilient through the Covid-19 pandemic. The scheme is approaching a 100 per cent occupancy rate with its two remaining vacant units currently the subject of negotiations with prospective occupiers. Outside of its anchor tenants, the centre is generating a net operational income of about €3.4 million per annum from leading retailers including Boots, H&M, Eason and JD Sports. Some €400,000 of this income is being derived from the scheme’s surface car park, which also offers development potential according to the selling agents. The guide price of €33.5 million reflects a net initial yield of 9.2 per cent and a capital value of €233 per square foot.
Built originally in 2005 at a cost of €120 million, the Marshes Shopping Centre boasts a diverse national and international tenant mix including grocery, necessity retail, fashion, and food and beverage distributed across a lettable area (excluding anchors Penneys and Dunnes Stores) of 13,366sq m (144,000sq ft) on a site of 27.6 acres. The scheme has a prime location in Dundalk town and is widely regarded as one of the foremost retail centres for the wider northeast region.
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In the short term, the investment offers the purchaser strong and sustainable rental income with multiple asset-management and income-growth opportunities including leasing up the remaining vacant space (last two units). There are a number of redevelopment options available also subject to planning permission, according to the selling agents.
Commenting on the sale, Roderick Nowlan, director at Bannon’s capital markets division said: “The acceleration of change within the retail sector, driven by Covid, has highlighted the strength of strong regional centres, especially those with robust grocery and necessity retail anchors as well as internet-resilient occupiers such as Penneys and Dunnes. The strong rent and service charge collection performance of this asset reflects this position.”
Kyle Rothwell, executive director at CBRE’s capital markets division, added: “We anticipate strong interest for Marshes Shopping Centre. The centre is performing exceptionally well and is supported by two very strong anchors and a complementary tenant mix. This scheme will appeal to those who are looking to complete short-term asset management and subsequently benefit from a fully let scheme.”