The recently-leased Aldi foodstore at Sandyford, Dublin 18, is to be the first distressed Irish property investment to be offered for sale this year on the international market, according to a report in today’s Irish Times.
The disposal is to be handled by Pearse Farrell of Farrell Grant Sparks, one of two receivers appointed to the Fleming Group following the transfer to NAMA of about €1 billion in loans taken out by the Cork-based developer.
Fergus O’Farrell of Savills expects to secure €8 million for the Aldi investment, which will show a net yield of 7.22%
According to The Times, the sale is likely to attract interest from overseas buyers as well as several local high net-worth individuals because of the strength of the covenant and the terms of the long-term lease agreed by the German discounter.
Aldi signed a 25-year lease from last October with a break option in 2029. It is possible – though unlikely – that the Aldi management will decide to buy in the investment because it already owns most of its stores in Ireland.
The company is paying an annual rent of €603,375 with five yearly rent reviews based on increases in the Consumer Price Index, subject to a maximum increase of 4% per annum.
The Aldi foodstore extends to 1,854sq m (19,956sq ft) and occupies a ground floor unit in The Boulevard, a highly-accessible shopping and residential complex just off the M50 motorway and adjacent to the Luas service. Shoppers can avail of 100 car parking spaces in the adjoining basement which is fitted with a travelator.
Last November, Savills also sold an Aldi retail investment at Parnell Street in Dublin’s north inner city to an Israeli businessman for €4.5 million.
The 1,215sq m (13,078sq ft) store will provide a return of 7.9%. There are 13 years to run on the 25 year lease. The next upwards-only rent review is due in 2013.
The Fleming group ran into financial difficulties over the highly ambitious Sandyford scheme, which was launched just as the property market took a nosedive. Only two of the four blocks planned for the Rockbrook development were completed.
About 190 of the 345 apartments were sold and most of the remainder have since been let. Aldi is the first retailer to move into the ground floor space set aside for retailing.
The Fleming group faced an uphill battle when they paid €245 million for two adjoining sites in Sandyford at the height of the property market in 2005. Most of this – €165 million – was spent on acquiring the 7.7-acre former Allegro site.