The fast-growing IPUT property fund is to take over ownership of Carrickmines Retail Park in south Dublin as part of a successful tender by the New York-based Marathon Asset Management for the shopping enclave.
IPUT offered around €78 million for Carrickmines in the first round of bidding but, to its surprise, Nama decided it should not be sold on its own but rather as part of the Parks Portfolio which also included four lesser-known parks in Drogheda, Mullingar, Clonmel and Carlow.
Because IPUT had not tendered for the entire portfolio it was precluded from bidding in the second round.
Joined fo
rces
However, IPUT then joined forces with Marathon who had survived the first round after pitching for the entire portfolio.
Marathon’s final bid of about €157 million for all five parks – a surprisingly high €47 million above the guide price – won the day.
IPUT has not revealed what its contribution has been to the successful tender but it is thought likely that it valued Carrickmines at close to €90 million.
In its final, successful tender Marathon apparently nominated IPUT plc to take Carrickmines at face value as part of its overall bid for the entire portfolio.
This arrangement was also flagged to Nama’s lawyers in the run-up to the final tenders in the knowledge that the State property company does not permit sub-sales. Under its sales procedures, Nama’s contract is solely with the highest bidder – in this case Marathon.
One source said that while Marathon had now been granted “preferred bidder status and exclusivity for a period to allow the contracts to be exchanged, it is well known that IPUT is sitting underneath waiting to buy the park at face value”.
Even at a €90 million valuation, the sale price will be below the €100 million paid for the park in 2007 by the late Liam May, one of the owners of Dundrum Town Centre, who died unexpectedly in 2008.
The strong interest in the south Dublin park stems from its impressive line of tenants and its close proximity to a vast number of middle-class shoppers.
It is currently producing a rental income of €4.4 million which will rise by another €300,000-plus if, as expected, a leading furniture retailer rents a vacant building on site extending to 974 sq m (10,500sq ft). Woodies DIY and garden centre is the anchor tenant paying a rent of €1.8 million for 6,038 sq m (65,000 sq ft).
The other traders are PC world who are paying €620,000; Smyths Toys (€530,000); Currys (€530,000); and Next (€400,000) along with Halfords, Hickeys Fabrics and 53 Degrees North.
IPUT is also in the process of sinking €10.5 million into a vacant warehouse at Blanchardstown Corporate Park in west Dublin which is much less complicated than the Carrickmines transaction.
Weighted down
The acquisition will go some way to rebalance IPUT’s property holdings which are heavily weighted down with office investments following a range of top-notch purchases over the past two years.
Last July, the fund also moved to broaden its portfolio by paying €26.5m for the Uniphar distribution centre in Citywest. This investment is showing a return of around 7.7 per cent.
The Musgraves distribution centre now being acquired has an overall floor area of 17,110sq m (184,168sq ft) including 2,100sq m (22,603sq ft) of offices.
Musgrave’s decision to sell the facility is all the more surprising as it plans to lease it back from IPUT for at least 10 years at a rent of €900,000 per annum.
One source said the building is exceptionally well equipped and has 34 loading doors and an eaves height of 12.5 metres.
It has gas-fired central heating as well as an air handling system. The building was originally owned by Superquinn and stands on a site of 4.5 hectares.
Phillip Harvey of industrial specialists William Harvey & Co handled the sale while BNP Paribas Real Estate advised IPUT.
