Meath retail scheme at €11.5m offers buyer net initial yield of 12.99%

With the rollout of Covid-19 vaccines continuing apace, investors weighing up the post-pandemic prospects for physical retail may be interested in the opportunity presented by the sale of High Street Ashbourne.

The Co Meath investment is being offered to the market by agent Cushman & Wakefield on the instructions of receivers Declan Taite and Brendan Hanratty of Kroll, at a guide price of €11.5 million.

Located at the heart of the busy town centre, the scheme takes in the entirety of Killegland Street and Desmond Street and is let to a range of well-known domestic and international retailers. Key tenants include McDonald’s, New Look, Lifestyle Sports, Boots, Card Factory, O’Brien’s fine wines and Euro Giant.

The Health Service Executive’s Ashbourne Primary Care Centre anchors the scheme and is in occupation on a long-term lease until 2037. And while the scheme is also anchored by Tesco, this unit is not included in the sale.

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High Street Ashbourne has the benefit of a mix of surface and basement parking, along with a multistorey car park. Constructed between 2003 and 2007 in five phases, the centre extends to an area of 176,000sq ft in total.

The centre has a current occupancy rate of about 75 per cent and a weighted average unexpired lease term (Wault) of 7.8 years to break option and 9.4 years to expiry with a total passing rent of €1,642,388 per annum. There is significant asset management potential according to the selling agent to increase the rent and improve the net operating income with seven deals currently agreed and in legals along with negotiations ongoing on another unit. Should this deal be completed, it would increase the rent receivable to approximately €1,782,000 per annum and the occupancy rate to 83 per cent.

Initial yield

The investment’s guide price of €11.5 million, exclusive of VAT, reflects a net initial yield of 12.99 per cent, assuming standard purchaser’s costs of 9.96 per cent. Should the units in legals and under offer complete in the coming months, the guide price would reflect a net initial yield of 14.09 per cent.

Peter Love of Cushman & Wakefield says: “This sale presents an excellent opportunity to acquire an established mixed-use scheme at the heart of Ashbourne town centre. The town is experiencing significant growth at present which has benefitted the development and ensured the centre traded extremely well throughout the Government’s recent Covid-19 restrictions. A number of tenants continue to trade while the remainder are due to reopen in the coming weeks.

“The performance of the scheme is further highlighted by the recent deals agreed which provides an immediate opportunity to increase the rent receivable in the short term and further scope to strengthen the scheme in conjunction with the expansion of the town in the coming years.”

The town of Ashbourne has experienced substantial growth over the past decade and is now firmly established as a major residential and commercial hub for Co Meath.