Davidson Kempner wins Bank of Ireland’s National portfolio for in excess of €170m

Davidson Kempner has this morning exchanged on the acquisition of the five-strong portfolio of Irish regional retail parks portfolio, dubbed the National portfolio, from Bank of Ireland for in excess of €170m.

DK logoOaktree Capital Management was the closest underbidder. Tristan Capital Partners and Benson Elliott were also finalists, as revealed by CoStar News one month ago.

The sale price of in excess of €170m reflects around a 5% premium to the €162m asking price, in the latest evidence that appetite to deploy capital in Irish real estate remains strong among yield-chasing international investors.

The net initial yield is 6.9%, based on an assumed sale price of €170m. Davidson Kempner, who partnered alongside minority asset management partner Alanis Capital, closed the National portfolio all cash, with financing already lined up. Expected terms include a five-year loan at a circa low 60s loan to cost, priced circa 250 basis points.

JLL and Savills were instructed by receivers KPMG and Mazards, for different retails parks, to sell the 1.1m sq ft National portfolio, on behalf of Bank of Ireland.

Davidson Kempner acquired the entire National portfolio, which comprised two lot sizes:

  • Lot 1: the 195,000 sq ft Nutgrove Retail Park in Rathfarnham, South Dublin;
  • Lot 2: the 380,000 sq ft Letterkenny Retail Park, the 260,000 sq ft Sligo Retail Park, the 170,000 sq ft Tullamore Retail Park and the 140,000 sq ft Deerpark Shopping Park in Killarney.

The current annual gross income across the entire portfolio is approximately €12.2m per annum and offers an attractive WAULT of approximately 10 years.

Nutgrove is the institutional, stabilised asset, while the four retail parks in lot 2 all carry varying degrees of value add opportunities.

Nutgrove, around 7 km south of Dublin city centre and includes 57,000 sq ft of office and leisure facilities, is currently producing a total rent of approximately €4.1m per annum with 76% of this income secured by Homebase, Harvey Norman and Aldi. The scheme’s retail units are fully let, with a 13.9 years WAULT.

Deerpark Shopping Park is anchored by Homebase, Marks & Spencer and Arcadia Group and is adjacent to Tesco Superstore and Aldi. Deerpark’s annual rent is €1.55m and its WAULT is approximately 4.4 years.

Letterkenny, the largest of the retail parks within the National Portfolio with 38 units, with tenants including H&M, New Look, River Island, Menarys, TK Maxx, Marks & Spencer, Homebase, Boots, Argos, Halfords and Smyths. The annual rent roll is €3.06m which is set to increase on expiry of H&M rent-free period. The WAULT is above nine years. 

Sligo Retail Park comprises 15 retail warehouse units and a cluster of three food units.  The scheme is anchored by Homebase, with over 9.5 years unexpired lease, as well as Halfords, Homestore & More, Currys, PC World, Harry Corry, Smyths Toys and McDonalds. The total current rent is €2.05m and a WAULT of eight years. 

Tullamore Retail Park is bookended by Heatons Department Store and Woodies with seven retail units on the linking parade and a standalone Burger King restaurant in the car park. Other tenants include Argos, DID Electrical, Minogue Furniture and Harry Corry.  The total rent is €1.47m per annum with an overall WAULT of 10.7 years. 

Almost €2.2bn has been invested in income-producing investment properties with a value of more than €1m across 109 transactions in the year to September 2015, according to CBRE. Approximately 41% of the total spend comprised assets with a value of more than €100m.

All parties declined to comment.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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