Ireland's largest retail warehouse, which will be occupied by giant British DIY operator B&Q, is to be prefunded by two pension funds. The base yield will be 6 per cent.
Salix, the Bank of Ireland pension fund, and Hibernian will be paying £25.2 million (€32m) for the warehouse of 107,423 sq ft, which will be rented initially at £1.8 million (€2.3m) per year.
Liffey Valley will be B&Q's first outlet in the Republic, though it has five stores in Northern Ireland, including Newry and Belfast. The Dublin store will pose a serious challenge to DIY chains like Atlantic, which already trades out of Liffey Valley and Woodies, which has a large store a short distance away along the N4.
B&Q's arrival may well lead to price cutting as the existing traders attempt to hold on to their customers. However, competition could have been even more intense if Liffey Valley had succeeded in landing Swedish home furnishings group IKEA. That company is unlikely to target the Republic for the forseeable future because of Government's ban on superstores.
Liffey Valley has been able to offer B&Q the largest outlet in the country because it was approved by the planners before the Department of the Environment restricted the size of units to 64,000 sq ft under the Retail Planning Guidelines, confirmed earlier this year.
As well as a retail warehouse, B&Q will have an open air garden centre and a builders' yard when it opens for business next April.
B&Q's reputation for stocking a huge range of goods at keen prices will greatly enhance the Liffey Valley Retail Park where 16 units, including Currys, PC World and Magnet, trade.
Two stores are still available to let on new 25-year leases. They can either be let individually, with a floor space of almost 10,000 sq ft, or as one unit double that size.
Exactly three years ago Telecom Eireann Superannuation Fund pre-funded the first phase of the Liffey Valley retail park, paying £45 million (€57.14m) for 170,000 sq ft of new space. The rent roll is understood to be close to £3 million (€3.81).
The fund, which is advised by Druker Fanning and Partners, has established a reputation in the market for buying in at an early stage to reap the full benefits.
Liffey Valley retail park, like the adjoining shopping centre, was developed by Grosvenor Estate Holdings and Cork-based O'Callaghan Properties.
Earlier this year, An Bord Pleanβla overruled a decision by South Dublin Co Council granting permission to double the size of the shopping centre to around 500,000 sq ft. The promoters are expected to reapply for a scaled-down extension which will include a supermarket. At the moment, Liffey Valley is the only major shopping centre in the country without a conventional supermarket.
Tesco had planned to open a large stand-alone supermarket on a site beside the shopping centre but this was also refused by the planning appeals board. Brian Cooney of Hamilton Osborne King, who handled the pre-funding of the B&Q store, said that the fact that the deal was signed after September 11th showed the determination of the main players to continue with their investment strategies.
