US firm bids €23m for Eyre Square centre

The New York-based Marathon Asset Management has emerged as the front runner to buy the freehold interest in Eyre Square shopping centre in Galway as well as a range of shops and retail units.

The US fund is believed to have agreed to pay around €23 million for the controlling interest in the city centre complex being sold by receivers on behalf of the Bank of Scotland (Ireland). With this portfolio currently producing rents of €2,032,000, the investment will show a return of about 8.5 per cent with the prospects of a higher rent roll when a number of structural changes are made.

There is already planning permission to replace the entrance off Eyre Square with a new three-storey building to accommodate five new retail units and a cafe/restaurant with a deck area at first floor level.

Eyre Square was developed by McInerneys and opened for business in 1991. Most of the 60 shops in the 14,864sq m (160,000sq ft) development were sold off in the early years to tenants or investors in a position to avail of urban renewal tax breaks.

McInerney retained ownership of the freehold of the centre as well as the common areas and a number of stores before selling out to Edward Holdings in the early 2000s. These shops include those rented by New Look, JD Sports as well as the Penneys store which are currently producing rents of €1,680,000 a year – 83 per cent of the total income.

The common areas have a mixture of kiosks, stores, telephone masts and signage areas which bring in an additional €250,000.

A number of small retail units let on short-term leases in the ramps area of Eyre Square are producing a further €67,000 per year.

A former bank building which forms part of the shopping centre at 19 Eyre Square has tenants Goodbodys and DNG Commercial on the upper floors.

City planners recently approved of the use of the ground floor as a food outlet and according to the selling agents, DNG Commercial and DTZ Sherry FitzGerald, there should be little difficulty in attracting suitable tenants.

The shopping centre continues to attract about 185,000 visitors per week, many of them using the adjoining 450-space car park which was sold earlier this year to Q Park.