The German fund manager GLL Real Estate has bought two shops on Dublin’s Grafton Street for a fraction of the price they made in 2007.
The fund will pay just over €40 million for the River Island store and the adjoining Wallis outlet – a long way from the €115 million paid for the investment by Dublin property developer David Daly in 2007. The two buildings have fallen in value by 65 per cent since the property market collapsed.
The latest off-market sale means the German fund is now one of the largest property owners on the city’s premier shopping street.
Three years ago it bought the adjoining AIB branch for almost €28 million in a sale and leaseback deal that is showing a return of 6 per cent. The River Island/Wallis portfolio will show a yield of about 6.85 per cent.
Mr Daly also bought the two shops in an off-market deal from Arnotts Ltd and Arnotts Pension Fund just before the the reversal in the fortunes of the property market.
The new German owners of the two shops have not given a breakdown of the current value of the two shops. When they were last sold, the Wallis building made €30 million and River Island had a price tag of €85 million.
River Island is currently paying a rent of €2,152,500 for its store, which is regarded as one of the best on the street because of its larger-than-usual floorplates.
The overall retail space of about 929sq m (10,000sq ft) includes 321.4sq m (3,460sq ft) on the ground floor.
Though the rent is considerably higher than the going rate on the street, it is unlikely to be reduced because the shop is held on a long lease with upward-only rent reviews.
The Wallis store is paying an annual rent of €787,000 under a similar lease, which has another 10 years to run.
Rents on Grafton Street have been falling over the past four years and estate agents have been finding it increasingly difficult to identify suitable tenants for vacant stores on the street. The former La Senza building was recently let at half its original rent after being vacant for 11 months.
Mr Daly is a former managing director of Manor Park Homes, who later set up Albany Homes. It became one of the largest housebuilders during the property boom. He was also a major player in the commercial market and launched Airside Retail Park in Swords.
