With the limited supply of investments currently in the market the sale of Edward Square in Galway is being well received by both national and international investors.
This prime retail investment comprises six retail units and is situated in the centre of Galway. The units were purpose built in 2000 to meet modern retailer requirements and as a result have attracted a strong high street line up such as the anchor Dunnes Stores along with Next, Top Shop, Oasis, and Miss Selfridge. The property is likely to continue to generate strong interest given the prime location and the fact that similar modern retail units are in such short supply in Galway city, where a significant number of retailers are searching for suitable space.
Many shrewd investors have been waiting for the right time and opportunity to emerge from the sidelines and with international investors now casting a serious eye over the Irish market this may well be seen as the right time to invest. Ireland currently offers investors a window to benefit from zero capital gains tax (acquire before end of 2013 ) and also has low acquisition costs of 4.46 per cent. These properties will also catch the attention of these foreign funds who are seeking income from secure tenants on long leases.
Edward Holdings developed this mixed-use scheme comprising some 7,900sq m of retail with 38 residential units on the upper floors in 2000. There is an opportunity to acquire the residential accommodation overhead as it is held in the same single ownership. This is a landmark development in Galway’s retail heart and connects to Eyre Square Shopping Centre where footfall figures for 2011 were almost 10 million.
The average weighted unexpired lease term of the retail units is approximately 11.5 years with a total annual income of €2,273,800 rising to €2,432,517 in October 2012 due to a fixed rental increase in the Dunnes Stores’ lease. The leases have the added benefit of upwards only rent review clauses.
The centre is being sold by Edward Holdings in collaboration with NAMA.
Joint agents Rosemary Casey of DTZ Sherry FitzGerald and Edmund Douglas of DNG Commercial are expected to quote a guide price of €27m for the retail element of Edward Square. The guide price reflects an attractive net initial yield of 8.62 per cent which compares favourably to the IPD 10-year retail average of five per cent.
NAMA may provide a loan to a purchaser of up to 70 per cent of the purchase price to qualifying parties, subject to terms and conditions.
The property provides an excellent opportunity to acquire a prime well-let asset at a yield well above the average historic rate for prime retail. Given current interest rates, property has rarely been so affordable and the ability to service and pay-down debt has returned. This secure asset also provides superior returns when compared to bank deposit rates. One of the key attractions of this investment is the strength of the covenants on institutional leases with international tenants. The property provides a stable return for potential investors with the prospect for medium to long term capital growth.
For more information contact DTZ Sherry FitzGerald at 091 569181.
