A group of private investors have bought Dun Laoghaire Shopping Centre for over £20 million in a deal that will give them a yield of close to 8 per cent. It is the largest retail investment to change hands this year.
The sale is another illustration of the increasing role played by private investors in the commercial property market with the support of their banks. The consortium in this instance is composed of about half a dozen business and professional people, most of whom already hold commercial property investments.
The new owners plan to hold the shopping centre as a long term investment and will continue to manage it with the staff currently employed, according to chartered surveyor Donal Madigan who acted for them. He said there had been a sea change in Dun Laoghaire, with many new developments either completed or planned for the borough. The centre was trading quite well, and while they would be monitoring its progress over the coming year, they had no immediate plans to embark on capital expenditure for the purchasers, he said.
Alan Bradley of Jones Lang Wootton advised the Irish Pension Fund Property Unit Trust (IPFPUT) on the sale of the 22year-old centre, which is producing a rent roll of £1.9 million.
The sale will allow the trust to re-balance its portfolio by freeing up funds for a number of prime investments in the pipeline. Its £250 million property portfolio includes Dundrum Shopping Centre, which is expected to be upgraded in advance of the development of a proposed £190 million town centre a short distance away. This will include a 350,000 sq ft shopping complex, hotel, office park, multiplex cinema and apartments.
The IPFPUT fund also holds the Wilton Shopping Centre in Cork, which is due to be extended following the purchase of six acres beside it. The Roselawn Shopping Centre in Castleknock, Dublin 15, also forms part of the portfolio.
One of the unusual features of the Dun Laoghaire centre is that the anchor store occupied by Quinnsworth is owned by the centre rather than the multiple. The 30,000 sq ft unit is held under a 35 year lease from 1976, with the next rent review due in the year 2000.
Other tenants include A Wear, with 4,000 sq ft, Lifestyle, with 5,000 sq ft, as well as Specsavers, H Samuel, Golden Discs, Adams Childrenswear and Japan.
Shop rents vary between £28 and £30 per sq ft and are somewhat lower than in either the Stillorgan or Blackrock shopping centres. Dun Laoghaire has 135,000 sq ft of retail space on three levels. There is an integrated car park with 350 spaces.
The complex also includes Gresham House, which has 37,236 sq ft of office space, most of it occupied by Quinnsworth's parent company Tesco. The current rent of £8 per sq ft is likely to rise by a considerable amount when reviewed shortly.
The new owners will obviously be anxious to maintain the centre's competitive position in a market that is becoming overcrowded. Apart from the nearby Bloomfields Shopping Centre a short distance away, the Dun Laoghaire centre would face even stiffer competition if reports that Sainsbury's would like to take over the Frascati Shopping Centre in Blackrock turn out to be correct. The pending redevelopment of Stillorgan Shopping Centre and the major complex planned for Dundrum also pose a threat.
