In one of the most significant retail investment sales in 2016, Savills is to offer ‘The SV4 Supermarket Collection’ to the market with an overall guide price in excess of €80 million, reflecting a net initial yield of 6.44%.
The SV4 Collection offers investors a superb opportunity to acquire three supermarket and shopping centre assets in Dublin and one shopping centre asset in Waterford, thus obtaining a significant foothold in the Irish supermarket and retail investment market. The collection is being offered for sale by private treaty in individual or collective lots, to allow maximum flexibility in the sale process.
The collection is being sold on behalf of Starwood Capital, Catalyst Capital and Key Capital who acquired the loans associated with the four supermarket assets, as part of Project Aspen, which was the first major non-performing loan (NPL) portfolio sale undertaken by Nama in Ireland. Since acquiring the supermarket collection, the vendors have successfully secured the Musgrave Group Plc as guarantor on all of the SuperValu stores being offered for sale.
Three of the four assets are situated in Dublin, these include the highly successful Lucan Shopping Centre which is being offered at a guide price in excess of €40 million representing a NIY of 6.45% and the high profile SuperValu schemes in Ranelagh and Rathgar, which are being offered to the market at a guide price in excess of €12 million (per asset). SuperValu Ranelagh reflects a NIY of 5.89% and Supervalu Rathgar provides a return of 5.97% based on the guide price. The collection also incorporates Kilbarry Shopping Centre in Waterford, where SuperValu have their main presence within the city. This is being offered at a guide price of €16,000,000 representing a NIY of 7.18%. The collection provides substantial scale with 22,950 sq. m. (247,031 sq. ft.) of predominantly retail accommodation across the four assets, with a current passing rent of €5.38 million and a WAULT of 13.2 years.
Musgrave Group PLC (T/A SuperValu) underpin 68% of the overall income with this collection. Musgrave Group encapsulates the SuperValu, Centra, Dialprix, Daybreak, Mace, MarketPlace and Dialsu brands. SuperValu had a presence of 222 stores throughout the Republic of Ireland in 2015 making them the No. 1 grocery supermarket in the country with an expansion strategy of 5 new stores planned in 2016 and a current market share of 25% of the Irish grocery market.
The centrepiece of the collection is Lucan Shopping Centre, which is an established neighbourhood centre completed in 1991 extending to 12,008 sq. m. (129,252 sq. ft.). This scheme is situated in a vast catchment area and is anchored by SuperValu, while Dunnes Stores hold a long leasehold interest over their store and pay a nominal rent. The annual passing rent is €2,695,934 per annum, SuperValu underpin 59% of the overall rent and the scheme has a WAULT of 11.8 years. Other notable occupiers within the scheme include McDonalds and Starbucks. At a quoting price of €40 million the property is expected to attract significant levels of interest from domestic and international investors given the success of the scheme and value add potential.
SuperValu Ranelagh is a busy scheme positioned in the centre of Ranelagh village adjacent to the LUAS station. The entire building extends to 2,363 sq. m. (25,433 sq. ft.) with extensive ground floor retail accommodation of approximately 928 sq. m. 9,987 sq. ft. which is a rarity for this location. FLYEfit the low cost gym, who now have 5 gyms across Dublin, occupy the upper floors. The property provides 42 surface car parking spaces and the entire property is situated on a site extending to approximately 0.62 acres. The passing rent of the property is €738,255 per annum and the WAULT is c.13.75 years. Given its prime location and the lot size of €12 million, this asset is likely to appeal to funds and private high net worth investors.
SuperValu Rathgar is an exceptional mixed-use investment opportunity positioned at the busy crossroads of Rathgar Road, Terenure Road, Orwell Road and Highfield Road. The scheme incorporates 2,396 sq. m. (25,791 sq. ft.) of commercial/ residential accommodation. This is a modern scheme providing retail at ground floor, with a mix of offices and residential apartments on the upper floors (12 units in total). There are 20 basement and 4 surface car parking spaces. The scheme also incorporates a vacant site to the rear zoned Z1 (residential and a standalone two storey building occupied by Runzone and Accounts Assist). The passing rent of the scheme is €748,080 per annum and the WAULT is c.18.1 years. Once again at a lot size of €12 million, and given the vibrant residential location, this asset is also likely to appeal to funds and private high net worth investors.
Kilbarry Shopping Centre situated 2km from Waterford City centre completes the collection offering an established, modern regional shopping centre investment opportunity which was constructed in 2000. The scheme extends to 6,183 sq. m. (66,555 sq. ft.) of commercial accommodation on a site of approx. 2.19 hectares (5.45 acres) offering 430 surface car spaces. The accommodation is laid out over two floors and comprises 4,603 sq. m. (49,550 sq. ft.) of retail space on the ground floor and 1,580 sq. m. (17,005 sq. ft.) of office/ ancillary accommodation overhead. The scheme is anchored by SuperValu who underpin over 83.38% of the rent per annum. The total rent per annum is €1,199,277 and it has a WAULT of 13.7 years. At a lot size of €16 million and given the high proportion of rent associated with the anchor tenant, together with the value add potential, Kilbarry Shopping Centre it is expected to attract significant levels of interest from both domestic and international investors.
Dessie Kilkenny of Savills comments: “This is one of the best supermarket and retail collections I have seen for sale in this cycle of the Irish investment market. We are continuing to witness good interest from both international and domestic investors who believe in the Irish retail story. Considering the covenant strength, unexpired lease term and proportion of income associated with the anchor tenant SuperValu, we are anticipating a good level of interest. Although offered as a collection, our clients are certainly open to offers for individual assets, in line with our structured sale process.”