£35m sought for Stillorgan centre

STILLORGAN Shopping Centre in Co Dublin is to be offered for sale on the Irish and British markets with a price tag of £35 million. The 30-year-old centre is being sold by the Bank of Ireland Pension Fund because it represents too high a proportion - about 30 per cent - of its property portfolio.

Funds generally prefer to keep single investments well below the 10 per cent mark.

Ian French of Hamilton Osborne King is understood to have had discussions with a number of institutions and property companies about placing the Stillorgan investment at a yield of under 8 per cent. It is thought unlikely that any of the Irish-based funds would be prepared to take the entire investment for the same strategic reason that it would also lead to their portfolios being too heavily committed to a single retail investment.

However, it would be no surprise if a consortium is formed to acquire the shopping centre. In a recent example of such an arrangement, Irish Life and Canada Life agreed to pre-fund an extension to The Square Shopping Centre in Tallaght at a cost of £15.7 million.

Stillorgan, the first modern purpose-built shopping centre to be opened in Dublin, is currently producing a rent roll of more than £2.8 million. The next major rent review will take place in 2001.

The present owners have investigated several ways of providing additional car-parking space to allow them to extend the shopping centre. Two years ago, they acquired Beaumanns yard, an adjoining property of about 10,000 square feet, for integration into the centre.

Plans to provide additional car-parking on part of the roof of the centre were turned down by both the local authority and An Bord Pleanala following objections by local residents.

The pension fund finally looked at the more expensive option of going underground but has not given any indication of the cost involved even if planning approval was forthcoming.

The new owners will undoubtedly want to upgrade the centre, which has undergone relatively few changes over the years, apart from two small extensions in 1987 and 1990.

The Bank of Ireland Pension Fund, Sal ix, which bought the centre in 1984 for £12.3 million, has done well from the complex, despite its open-air format and the strong competition coming from rival centres at Merrion, Blackrock, Cornelscourt, Dun Laoghaire, Dundrum, Ballinteer, and Nutgrove.

Stillorgan is still trading exceptionally well because it is located in the centre of a densely populated middle-class area. One expert in the commercial property market said he would be reluctant to make any drastic changes at Stillorgan because it was trading strongly.

There are 63 retail outlets, nine of which are on the first floor. Net lettable space stands at 140,000 square feet. In recent years, Salix claims to have secured a return of 8.5 per cent on its investment. Rents rose in the last review from £30 to £45 for the standard 960-square-foot unit. Initial leases were for 42 years with seven-year reviews.

The anchor tenants at Stillorgan are Quinnsworth with 43,000 square feet, and Dunnes, with 16,000 square feet. McDonalds and Arnotts also occupy two larger units of 8,500 and 6 000 square feet respectively. The centre has a good tenant mix and units attract substantial premiums on the rare occasion when they come on the market.

Stillorgan Shopping Centre was built at a cost of £1.5 million by MEPC (Ireland) and was opened by the then Taoiseach, Sean Lemass, on December 1st, 1966.

Two years ago, Irish Life took tentative steps to dilute its interests in the ILAC shopping centre in the middle of Dublin when it suggested to British Land that it should exchange 50 per cent of the ILAC and St Stephen's Green shopping centres. British Land did not accept the offer. The ILAC, valued at around £45 million, represents more than 10 per cent of Irish Life's property portfolio.