Having been offered to the market at an overall guide price of €31.5 million, Drogheda’s Southgate Shopping Centre has been sold in two lots for a total of €22.475 million. The sum secured represents a 29 per cent discount on the figure sought by agent Colliers when it offered the mixed-use scheme to the market in March of last year.
Developed in the early 2000s by Phil Reilly’s Shannon Homes and his business partner, Meath businessman John Stanley at a cost of some €120 million, Southgate Shopping Centre briefly comprises 57,350sq ft of retail space, 93,600sq ft of office and retail accommodation, 64 apartments and 730 car spaces.
StarStone Property Group, the partnership led by Meath-based investor Patrick McDermott and the owner of UK bookmaker Star Sports, Ben Keith, has paid €13.2 million for all of the centre’s retail units apart from its anchor store, which is owned by Dunnes Stores, along with its offices and 11 apartments. The remaining 53 apartments were sold by Colliers to a private investor for €9.275 million, or an average of €175,000 per unit.
News of StarStone’s purchase of the Drogheda development comes just over two years after it acquired High Street Ashbourne, a retail scheme comprising 70 units distributed across two streets in Mr McDermott’s hometown of Ashbourne, Co Meath. The scheme is anchored by Tesco, and StarStone has plans to expand its offering through the development of additional primary care facilities, as well as aparthotel and assisted living units.
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Outside of these interests, StarStone owns a large number of mixed-use town centre buildings in Drogheda along with a number of mixed-use properties in Dublin 1, 7 and 8.
While the retail portion of Southgate Shopping Centre is anchored by Dunnes Stores (owner-occupied) and includes a mix of local retailers offering daily shopping, convenience uses, food/beverage and leisure options, this element of the scheme accounts for just 17 per cent of the overall annual rental income of €2.47 million per annum. The majority of the rent roll is derived from Southgate’s offices (44.5 per cent) and residential rental units (38 per cent). There is additional mast income of €18,000 per annum.
The offices have a strong tenant base that includes two State agencies, namely the HSE and Tusla. The HSE holds two leases for 15 years from June 2022 and December 2017 respectively at a combined rent of €360,592 per annum. Tusla, the State-backed child and family agency, has a 10-year lease from July 2019 at an annual rent of €172,000.
Coca-Cola, which employs around 200 people in Drogheda, uses Southgate to house its integrated services organisation, which provides a range of support services globally, including finance, procurement, human resources. Coca-Cola holds a lease for 20 years from January 2011 at a rent of €438,508 per annum, subject to a break option in June 2026 subject to nine-months’ written notice.
Commenting on its acquisition of the scheme, StarStone said: “We have several new exciting tenants lined up to take occupancy in Southgate Shopping Centre over the next 12 months and while it is a well-built development, completed by Shannon Homes in 2008, it is 16 years old now and offers many asset-management initiatives. We also see future development potential in the centre for additional office, retail and residential accommodation.”
Michele McGarry, who handled the sale on behalf of Colliers, said: “Colliers are delighted to have concluded the sale of Southgate in two separate lots. The transaction demonstrates the demand for good quality, well-located income-producing assets.”
