A fund managed by Davy Real Estate is closing in on a deal to acquire Athlone's Golden Island shopping centre for just over €35 million.
While the fund’s acquisition of the 23-year-old centre at that level will see it secure a net initial yield of around 8.5 per cent off the scheme’s current €3.25 million rental income, the price reflects the challenge the retail sector is facing from the growth of online shopping internationally.
Agent Cushman & Wakefield had been seeking offers in excess of €41 million for Golden Island when it brought the scheme to the market on behalf of current owners Credit Suisse in May of this year. Credit Suisse, for its part, bought the property from British supermarket giant Tesco for €43.5 million in 2016 .
Cushman & Wakefield declined to comment on the matter when contacted by The Irish Times.
Developed originally in 1996 by the late Owen O'Callaghan, Michael Tiernan and Tom Diskin, Golden Island shopping centre is anchored by Penneys and Tesco and an IMC Cinema. The wider tenant mix of more than 40 retails units includes international names such as Boots, Argos and Burger King.
Excluding the cinema, the retail element of the scheme extends to an overall area of more than 14,800sq m (160,000sq ft). There is a substantial car park with 1,000 spaces.
The shopping centre has an average footfall of more than 68,000 people a week, or over 3.5 million people annually.
Since securing ownership of Golden Island in 2016, Credit Suisse increased the annual rent roll from €3.1 million to €3.25 million through a combination of new lettings and increases secured on a recent phase of rent reviews.
The proposed extension of the IMC Cinema (subject to planning) and the potential development of a new 2,500sq ft restaurant unit (which will be owned by the landlord) are expected to increase visitor footfall and “dwell time” further.
Shareholdings
News of the Davy fund’s intended purchase of Golden Island comes just three weeks after The Irish Times report of its entry into exclusive talks for the acquisition for €115 million of two separate shareholdings amounting to a 62.4 per cent stake in Dublin’s St Stephen’s Green Shopping Centre.
The subject shareholding is held by New York-headquartered Madison International Realty and businessman Pierce Molony, and comprises individual holdings of 35.4 per cent and 27 per cent respectively.
The remaining 37.6 per cent stake in the landmark retail scheme is owned by Irish Life, and was not made available for sale as part of the process which is being handled by agent HWBC. It is understood Irish Life intends to retain ownership of its share in the St Stephen's Green Shopping Centre following Davy's expected purchase of the Madison and Molony interests.
Developed in 1988 by British Land, the St Stephen's Green Shopping Centre has more than 90 shops over three levels with an overall floor area of 29,728sq m (320,000sq ft), and is currently producing rental income of about € 8 million.
