The strength of the retail investment market in Limerick will be tested shortly when two adjoining buildings on William Street, rented by Boots and Lifestyle, are offered for sale by private treaty.
Agent Palmer McCormack is seeking a combined price of £8.3 million (#10.54m) for the two properties, which are producing a total rental income of £340,000 (#431,710).
Alternatively, the two investments will be sold separately with an asking price of £5.5 million (#6.98m) for Boots and £2.8 million (#3.56m) for Lifestyle. A price of £8.3 million (#10.54m) would produce an initial yield of only 3.78 per cent - a price that reflects the strength of the covenants rather than the location. However with 22 months to run until the rent on the Boots store is reviewed, the selling agent estimates that the yield should eventually move up to over 5 per cent.
Boots is currently paying a rent of £190,000 (#241,250) but according to Palmer McCormack, this should rise to £370,000 (#469,803) on review. Because the ground floor shop has a dual frontage on to William Street and Cruises Street, a revised rent of £370,000 (#469,900) would equate to a Zone A figure of £130 (#165) per sq ft on William Street and £150 (#190) on Cruises Street.
The investments are clearly aimed at the institutions because few, if any, private investors are likely to settle for a yield below 4 per cent except perhaps in Dublin's two main streets. Both investments are owned by Ger Cassidy, who is understood to have received significant key money from Boots when the UK chain moved into his 4,672 sq ft chemist shop. Mr Cassidy bought the adjoining premises from Dublin bookmaker Joe Donnelly over two years ago and let it to Pound City. Lifestyle Sports is to occupy the store.
