The FINANCIAL — The long-anticipated sale of The Square Towncentre Tallaght has been formally announced on August 30 with joint agents Cushman & Wakefield and JLL quoting in excess of €233 million for the controlling interest within the centre.
Situated in Tallaght, one of Dublin’s largest suburbs with a total catchment population of 1.3 million, the 577,500 sq ft scheme was originally opened in 1990 and sits on a site of approximately 27 acres. Anchored by Tesco, Debenhams and Dunnes Stores, The Square Towncentre is one of Dublin’s key shopping destinations with door counts in the region of 22 million per annum.
With over 160 units, the scheme has a strong tenant mix of household names including River Island, H&M, New Look, Heaton’s, Boots, Argos, Nando’s, Starbucks and IMC cinema. Its core convenience offer is complemented by an extensive range of fashion users, a strong food and beverage offering and a 13 screen cinema and over 2,400 car spaces. The Square Towncentre is effectively the town centre for Tallaght providing a range of services for one of Ireland’s most densely populated areas, according to Cushman & Wakefield.
A number of units in the scheme were originally sold to owner occupiers, individuals and to groups of separate investors. Over the past 6 years the ownership of the scheme has undergone a significant transformation with the current vendor consolidating its ownership to a position whereby the new owners will hold 118 Retail Units (including a 13 digital screen Cinema) and 6 ATMS in the centre and have the controlling stake in the management company.
The vendor’s interest is generating a net operational income of approximately €13.97m with a current weighted average unexpired lease term of just under 7 years. Over 70% of this income is secured for over 5 years.
In addition to the long term secure income from high quality tenants, the investment provides the opportunity to further grow income via significant asset management and development opportunities. In 2014 planning permission was granted for a major development consisting of the phased construction of two independent extensions at the northern and southern ends of the scheme. The northern extension includes a new two level department store with a Gross Lettable Area (GLA) of approximately 65,000 sq. ft. together with 8 no. retail units providing a total GLA of approximately 80,256 sq ft. The southern extension provides for a single level unit located off level 3 with a GLA of approximately 59,470 sq ft. The extensions will see the existing car parking provision increase to over 2,800 spaces with the addition of a new six level multi- storey car park.
Current rent levels at The Square Towncentre provide a significant base for future rental growth. Strong rental upside continues to be forecast for the Irish Retail Market. For deals undertaken in the last 5 years there is already ample evidence to suggest uplifts for the near term rent review cycle.
At a quoting price of €233m the investment will provide investors an attractive immediate return of approximately 5.75%.
Cushman & Wakefield and JLL say they expect considerable interest in the sale from both domestic and international investors.
Kevin Donohue, Head of Investments at Cushman Wakefield and John Moran, CEO at JLL who are handling the sale said: “The Square Tallaght provides investors with an opportunity to control one of Dublin’s largest regional shopping centres and offers the ability to participate in the Irish retail market at a time when retail sales are on an upward trajectory and the Irish economy leads the way in the EU. The asset offers investors long term secure income with immediate ability to drive this forward via existing development and asset management opportunities, which will further enhance The Square as one of Irelands top shopping destinations.”