Consortium agrees to pay £13m for centre

CONSORTIUM has agreed purchase terms at slightly over £13 million for most of the shops in a regional shopping centre which is being built in Athlone, Co Westmeath.

The investment will produce a yield of 7.75 per cent, in addition to designated area tax breaks.

If the deal goes ahead, it will mean the Golden Island shopping centre will be sold before it opens for business next autumn. The anchor stores have already been sold to Quinnsworth and Easons.

Joe Bannon of Harrington Bannon, which is the letting agent for the centre, said he was unable to confirm whether the investment had been sold.

The agency originally invited four estate agencies to bid in the region of £12 million on behalf of their clients for the shops. When higher offers were received, direct negotiations were opened with the bidders. The selling price is based on a rental income of £1.1 million.

The higher than expected price being paid for the investment again underlines the strong demand for properties in tax designated areas. Business and professional people have spent almost £90 million in the past year on tax-driven investments.

The sale of the Athlone retail units is a considerable coup for the developers who succeeded in persuading the then Minister for the Environment, Mr Smith, to grant tax designation for the development the day before the Fianna Fail-Labour Coalition ended its term of office.

Athlone businessman Tony Diskin, who owns the land on which the shopping centre is being built, is understood to hold a majority stake in the complex. His partners are Cork-born property investor Owen O'Callghan and Michael Tiernan of Limerick.

Quinnsworth has paid around £3.5 million for the anchor store of 35,000 square feet. A sister company, Penneys, has paid about £2.5 million for a unit of 25,000 square feet and Easons is to trade out of a 6,200-square-foot bookstore, which cost close to £1 million.

Letting terms for 14 of the 34 shops have already been agreed at around £35 per square foot. Most of the traders with commitments will be providing basic services or have food-related outlets. The lineup includes three leading UK multiples. A letting campaign for the fashion stores will be launched after Christmas.

The entire development will cover a floor area of 160,000 square feet of shopping, 1,000 car-parking spaces and a multiplex cinema.

Golden Island will be in direct competition with a 21-year-old shopping centre a short distance away, where Quinnsworth are also the anchor tenants. Quinnsworth and a sister company, Lifestyle, pay a combined rent of £110,000 for 24,000 square feet in that centre, where their leases have another 13 years to run.