Forestside shopping centre in south Belfast has changed hands in what is easily the biggest single commercial property transaction in Northern Ireland. It is understood that a consortium of investors has paid just over £70 million sterling for the 250,000 sq ft centre, which is anchored by Sainsbury, Dunnes Stores and Marks & Spencer. Forestside has a rental income of £3.5 million and the sale price represents a yield of just under 5 per cent.
Commercial agency sources in Northern Ireland point out that Forestside is exceptional in that it commands Zone `A' rental levels of around £180 per sq ft. This is close to the top prime levels in Northern Ireland such as those in Belfast's Castlecourt Centre. Agent Lambert Smith Hampton, which has been involved in the sale of a number of other shopping centre investments in Northern Ireland in the past three years, acted on behalf of the purchasers. Jones Lang LaSalle acted on behalf of the vendors.
Forestside was developed by Sainsbury and the Stanifer Group. Forward funding was provided by the Universities Superannuation Scheme (USS) group. This is understood to have paid £50 million for the development, which opened in 1998.
The centre was sold in a one-to-one deal to investors who have been active in the retail market in the North. The investment is supported by funding from the Ulster Bank, part of the Royal Bank of Scotland group. Mr Alan Stewart, head of business banking with Ulster Bank, said: "We are delighted to have played the lead role in the financing of a deal of this quality and size."
Mr Paddy Brennan, of Lambert Smith Hampton, said the deal reflected the confidence in the upper end of the retail market in Northern Ireland.
Lambert Smith Hampton had previously been involved in the sale of the Richmond Centre in Derry in June 1999 for £22 million, the Flagship Centre in Bangor for £14.8 million in July 1999 and the Park Centre in south Belfast for £11.1 million in October 1998. The largest previous commercial property transaction in the North was the sale of the 230,000 sq ft Castlecourt Centre by its developers to the UK property consortium MEPC. The centre was reported to have changed hands for £60 million in 1998.
The reported 4.7 per cent yield on the Forestside sale reflects the market view of its trading value. This compares with the reported initial yield on the Park Centre in late 1998 of 8.3 per cent. Forestside has three anchor stores - Sainsbury, Dunnes Stores and Marks & Spencer, - 30 mall units including Next, HMV, Monsoon and Boots and seven smaller external units.
