The Golden Island shopping centre in Athlone is to be sold by its UK owners Tesco.
The surprise announcement comes after the beleaguered supermarket giant announced the closure of a large number of unprofitable stores in the UK and the loss of thousands of jobs in an attempt to reverse a slump in sales and profits.
Seán O’Neill of agents TWM is quoting in excess of €40 million for the centre which is producing a rental income of €3.1 million and will provide the new owner with an attractive initial yield of 7.42%.
Tesco’s decision to proceed with the sale may also have been prompted by the continuing demand for such investments by overseas funds amid signs that a recovery is well under way. Retail capital values have risen for the past seven quarters in line with the steadily improving business sentiment.
Funds interested in Golden Island will not have to look far for some comparison on capital values. Golden Island happens to adjoin another shopping complex, Athlone Town Centre, with a slightly larger floor area and a rental income of €4.9 million.
This investment is believed to have made close to its guide price of €61 million when it was sold earlier this year at a 7% yield as part of the Cornerstone Portfolio.
Golden Island’s success is largely based on its food and convenience offering, with Tesco and Penneys as the main anchors. The principal attractions in the second centre are Marks & Spencer, H&M, Zara and Next.
The marketing campaign, due to get underway later this week, will have an interesting twist to it. While the sale of the shopping centre does not include Tesco’s 3,809 sq.m (41,000 sq.ft) store, the company is willing to consider a sale and a long leaseback arrangement of the anchor unit.
Mr O’Neill says investors will be invited to bid for the centre with the Tesco store included and also excluded.
Funds who would like the supermarket included in the sale could expect to rent it at €215 to €269 per sq.m (€20/€25 per sq.ft) or roughly €800,000 to €1 million per annum on a long-term basis.
Article by The Irish Times