Five relatively small provincial shopping centre are to be offered for sale on the instructions of Nama.
Joint agents Bannon and Lisney are to seek in excess of €50 million for the grocery-led centres in Dungarvan, Thurles, Mullingar, Navan and Cashel which are to be sold in a single lot.
The Harvest Portfolio is producing a combined rent of €4.8 million which will give the purchaser an initial yield of just over 9 per cent.
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Deloitte, the professional services group, is co-ordinating the sale of the various centres which are anchored by leading multiples Dunnes Stores, Supervalu and Tesco. In only one case – Cashel – the anchor store rented by Tesco is included in the sale.
There are more than 100 traders in all in the various centres which have an overall floor area of 24,154sq m (260,000sq ft) and a vacancy rate of 2,787 sq m (30,000sq ft).
The portfolio also includes more than five acres of development land, much of which is expected to be used if the pick up in the retail market continues. Whoever buys the centres will inevitably press to have the vacant commercial space let.
The selling agents are likely to put a value of about €16 million on Dungarvan Shopping Centre where Dunnes Stores are the major attraction and where 90 per cent of the space is occupied.
The overall rent is about €1.5 million and the weighted average unexpired leases work out at 11 years.
One of the attractions here is that the sale includes 4.5 acres which are zoned for “town centre” use. Dunnes Stores Thurles Shopping Centre has an overall retail area of 4,645 sq m (50,000sq ft) apart altogether from the main supermarket which is owned by Dunnes Stores.
The centre is producing a rental income of €1.15 million and with an average of 6.9 years still unexpired on the various leases the centre could well be valued at about €12 million. Dunnes are also the principal player in Harbour Place Shopping Centre in Mullingar which is trading well and is valued at about €10 million. The line of tenants includes Boots, Holland & Barrett and Peter Mark and the rental income comes to €970,000. Typical leases have another 5.44 years to run. Cashel Town Shopping Centre is the only purpose built retail complex in town and with Tesco contributing most of the rental income of €730,000 on a long term lease the overall value of the complex is likely to be at least €8 million. The average unexpired lease term is 12 years.
Tesco also operate a petrol filling station between the centre and junction 9 of the M8 motorway. Whoever buys the portfolio will undoubtedly launch a renewed marketing campaign to find tenants for about 20 shops lying vacant in what is an impressive looking centre.
The fifth retail complex in the portfolio, Johnstown, is located more than two miles from Navan on the edge of a string of housing estates owned mainly by Dublin workers attracted by cheaper house prices during the boom. Best-run supermarket The centre has what many shoppers acknowledge is the best-run supermarket in town – Supervalu.
The remaining tenants, including Hickeys pharmacy and Boyle Sports, contribute to the overall rental income of €425,000. The average lease term remaining here is 13.5 years and a new owner could increase the rental return if a tenant can be found for around 929sq m (10,000sq ft) of office space over the complex. The Johnstown centre is thought to have a valuation of about €4 million. Rod Nowlan of Bannon and Duncan Lyster of Lisney said the sale provided investors with an opportunity to access "the improving Irish economy through a resilient collection of grocery-led retail schemes which are embedded in strong regional towns."
The various assets provided strong cash flows from tenants that were largely paying rebased rents. Each of the schemes offered significant asset enhancement opportunities to improve their position in their respective markets and enhance returns.
