Saturday 23 June 2018

Investor checks out with €49m Tesco and Aldi sale

Aldi in Sandyford is one of the supermarkets which is up for sale
Aldi in Sandyford is one of the supermarkets which is up for sale
Property tycoon Igal Ahouvi

Ronald Quinlan Commercial Property Editor

AN Israeli property tycoon who funded supermarket expansion at the height of the financial crisis in 2010 has put a portfolio of four stores on the market for nearly €50m.

Igal Ahouvi has decided to cash in his investment, with agents TWM quoting an overall price of €49m for the Supermarket Collection - a portfolio of four properties incorporating almost 16,000 sq m (172,000 sq ft) of space which is leased to supermarket giants Tesco and Aldi.

The stores are in Roscrea, Co Tipperary; Sandyford, Dublin; Gorey, Co Wexford; and Cahir, Co Tipperary.

Mr Ahouvi went against the prevailing tide by providing the funding for a Tesco in Roscrea In 2010. Such was the level of despair in the commercial real estate sector, it was to be one of just two investment deals completed that year.

Seven years on, with the economy forging ahead, Mr Ahouvi is understood to be looking for fresh opportunities in the Irish property market.

Taken together, the properties are delivering €3.41m annual rental income and have an average unexpired lease term of 11.35 years.

Seventy-four per cent of the rental income is from Tesco, which has the second-largest share of the Irish grocery market at 22pc. Aldi, which has 11.5pc of the market, accounts for the remainder.

Potential purchasers can expect to secure a net initial return of 6.67pc based on the €49m guide price being quoted by the selling agents.

TWM's Sean O'Neill believes that the long-term secure income flow from Tesco and Aldi will suit investors seeking security in uncertain economic times.

Mr Ahouvi's decision to sell the four supermarkets would appear to be well-timed. Only yesterday, Savills Northern Ireland announced the sale for more than £27m (€29.9m) of the Tesco Extra foodstore in Newry, Co Down. Built in 2013, the property was sold by Aberdeen Standard Investments to a private investor.

Let to Tesco on a 25-year lease from May 1, 2013 at an initial rent of £1,588,167 a year, it is set to deliver a net initial yield of 6pc for its new owner.

Ben Turtle of Savills Northern Ireland said with Tesco as a tenant, the property had seen strong demand throughout the sales process

Tesco is the largest supermarket chain in the North, with over 50 stores and 34.7pc market share.

Irish Independent

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