Two Galway retail units on the market for €4.5m
TWO top-rated retail units in Galway will hit the market this week with a total guide price of €4.5m.
The rack-rented properties are being brought to market by Douglas Newman Good Commercial.
The properties are available either as individual units or as one lot. If sold as one lot, the net initial yield comes to 7.45 per cent.
The first property is at 1 and 2 Edward Street in the centre of the city, and has a guide price of €1.5m, equivalent to a net yield of 7.98 per cent.
The premises is leased to the clothing retailer Warehouse Fashion Ireland on a 20-year lease with upward only rent reviews from October 2007. The next rent review is set for 2023.
Passing rent on the property is €125,000 per annum and there is a tenant break option in 2023 subject to a six-month notice period.
The second property is the Cara Pharmacy building – a mixed-use three-storey building including three floors of retail and two floors of what DNG describes as "hi-spec, self-contained" offices.
The premises is going for €3m at a net initial yield of 7.18 per cent.
The retail business is let to Cara on a 15-year lease which began last August. There is a fixed increase baked into the lease after year five, and an open-market review after the 10th year.
Passing rent on the first five years is €200,000. The potential turnover top up is limited to €225,000
Cara Pharmacy Group have guaranteed the lease and Bank of Ireland has made a limited one-year rental guarantee as well. The tenant has a break option after year 10.
The offices above the shop are let on a short-term basis at €25,000 per year.
The agents describe the properties as being part of a "landmark development" in the centre of Galway and interconnecting with the Eyre Square Shopping Centre in the middle of the city.
Almost 10 million people passed the shops last year, and a number of blue-chip retailers are near by including the likes of Brown Thomas, Next and Dunnes Stores.
"Many 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 is seen as the right time to invest.
"Ireland currently offers investors a window to benefit from zero capital-gains tax if acquired before the end of 2014 and also has a record low stamp duty rate of 2 per cent," DNG said.
"The property provides a stable return for potential investors with a good prospect for medium-to-long-term capital," the agents added.
The sale of these units will be closely watched, and will be seen by many as a yardstick for the health of the retail market outside Dublin.
While they are in prime locations in Galway, much of the positive activity in the retail sector this year has been based in Dublin.