Liffey Valley €350m sale close to agreement

AGREEMENT on the sale of Liffey Valley shopping centre in west Dublin is now expected within the next month.

Two UK investment funds are due to pay in the region of €350 million for the complex and a substantial adjoining site off the M50 which has been granted full town status.

A blanket of secrecy has surrounded the negotiations which have been ongoing for several months. The two funds due to purchase the centre are FC Reit Asset Management and Area Property Partners who will be expecting a yield of around 9.45 per cent once the current review of rents has been completed.

A sale of the property will be by way of a transfer of shares in the operating company which would involve stamp duty of only 1 per cent as against the standard stamp duty of 6 per cent.

The centre, which is fully occupied, is currently producing a rent roll of over €30 million, a figure that is due to rise to €34 million when new rents have been agreed.

The Vue cinema complex in Liffey Valley is currently rented at €2 million per annum. Other major tenants include HM, which is paying €1.1 million; Boots and Next, which are each paying €1 million; River Island, €850,000 but currently under review; A|Wear, €400,000; H Samuel €260,000; Fields Jewellers €250,000 and Bests, €225,000.

Owners Morley Fund Management and the Duke of Westminster’s Grosvenor Estates first offered Liffey Valley for sale along with an adjoining site of 17.3 acres in July, 2008, when they invited offers of between €300 million and €400 million for a 50 per cent stake.

By then, the recession and the banking crisis were beginning to take hold, and there were strong indications that property values were beginning to slide.

When the sale was announced, the centre was producing rents of €31.31 million from the 46,400sq m (499,445sq ft) of retail and leisure space.

Earlier this year, South Dublin County Council granted planning permission for a major mixed-use extension, but imposed exceptionally heavy development levies of €18 million to be shared between the council and the developers of Metro West. A further levy of €3.6 million was imposed on the operators of a proposed new supermarket.

Not surprisingly, the owners of the shopping centre have appealed against the severity of the levies, and a final decision is now awaited from An Bord Pleanála.

The planning permission provides for a 62,000sq m (667,361sq ft) mixed-use extension with an 8,000sq m (86,111sq ft)civic square.

The extension is to include a large supermarket for Tesco, two department stores and 60 retail units, as well as two multistorey car parks, one an underground with a capacity for 2,100 cars.

Reit Asset Management has bought several major property portfolios over the past nine years with Area Property Partners, formerly known as Apollo Real Estate Advisers. Reit merged with FC in 2008.

Within Ireland, FC is a strategic investment partner with the life insurance company Friends First.

If the sale of Liffey Valley is confirmed, it will be largest property transaction since Eircom Pension Fund sold The Pavilions shopping centre in Swords for €575 million in the summer of 2006.

The Liffey Valley sale is being handled by Savills and DTZ Sherry FitzGerald.