NAMA is connected to the sale of two retail properties – one in Derry and one in Dublin. This entry examines the pricing differences.
Jack Fagan in the Irish Times reports that NAMA is offering a 20,000 sq ft retail property in Sandyford in south westDublin for €8m. The property is leased to German discount retailer Aldi for €603,375 per annum. The start date of the lease is October 2011, is for 25 years, has a break clause for 2029 and rent is reviewed every five years in line with the Consumer Price Index subject to a maximum of 4% per annum.. The implied yield is 7.5% and price per square foot is €400 and annual rent per square foot is €30. The property was part of John Fleming’s group – John recently emerged from bankruptcy in the UK which saw his former €1bn+ property empire repossessed by his creditors.
Meanwhile Margaret Canning in the Belfast Telegrah reports that just across the Border in Derry, another retail property is now on the market, again with NAMA in the background. The 33,000 sq ft property at 150 Strand Road in Derry is said to be on the market at GBP 19.4m (€23.2m) and it generates annual rent of GBP 1.1m (€1.32m). The property is supposedly on the market through Lisney’s but a search of its 34 commercial properties on offer in Northern Ireland this morning doesn’t throw up any match. The implied yield is 5.7% and price per square foot is GBP 588 (€704) and annual rent per square foot is GBP 33 (€40). The Belfast Telegraph reports that the sale includes a 0.65 acre development site which will distort comparisons to a degree. The property is being sold by the McGinnis Group whose registered name is Monnaboy Limited. Last month, the BBC reported that NAMA had taken over loans connected to the group.
Why is Northern Ireland’s retail property sector so much more attractive than the Republic’s, in the sense that yields are lower and capital values/rents are higher. In the office sector, the reverse is apparently true with prime rents in Belfast almost half those of Dublin. As with any property, there will be unique details – leases for example – but on the face of it, the difference between the two cities is striking.
NAMA Wine Lake 
Its Aldi Ireland V Sainsburys and sterling,but agreed the pricing differential is striking.
Just as interesting is why they leased the space to such a low end tacky retailer,the price per sq.ft. indicates a loss leader rent,warm body to stop the carrying costs.Could they not find a dollar store or charity shop.
The timing of the sale curios too,if and it’s a big IF someone buys and intends finishing the development,you have to deal with another owner.
Always better to control ones own destiny,the other Aldi was purchased by overseas investors,they can be complicated if joint decisions have to be made.
Savills has the Aldi,Sandyford listing,ran an ad in IT other day, clearly stated Aldi Ireland,not on web site but Aldi Parnell St. is.The Fagan piece coincided with large ad.
Aldi Inner City paying 32 a sq.ft.,more than in Sandyford, wonder who ‘negotiated’ the deal..’ah go pay us less than in PARNELL ST…..’
Prime Prime suburban Dublin retail.
Few numbers- for illustrative purposes-NO closing costs-this is one metric we utilize to comp. alternative deals here.
ALDI IRELAND-not clear if any parent guarantee but unlikely.
Aldi ask 8,000,000
Rent 603,375 or 30 a foot!
Cash on Cash 7.54
70% mortgage @ 5%,ten years,25 year amortization.
Debt Service 392,844
Net Cash Flow 210,531
Equity Required 2,400,000
ROE 8.77%
@WSTT 75 basis points higher than ‘no risk’ Irish bonds.
Sainsburys-“Prime” Londonderry location.
Ask 20,000,000
Rent 1,100,000
Cash on Cash 5.5%
Same mtg. terms as above very difficult to work,the annual debt service would be just under a million,the coverage awfully tight for most lenders.
Debt service 982,111
Net Cash Flow 117,889
Equity Required 6,000,000
ROE 1.96%
Unless,you can find a funky debt provider,with say interest only money,almost impossible to attain a constant below 5.55 to achieve positive leverage in striking contrast to Sandyford.
The benefits of ‘staple financing’ !
There is no comparison,strange to sell it but an awful lease up plan, Israel investors bought a Aldi last year,they are difficult to deal with,just ask David Norris.
NTMA should buy the Aldi,they achieved a derisory 1.6% at NPRF,at least no bonuses over there,in private practice with that return you would get to spend quality time with your family lots of it.However,the Irish State may be a little long RE these days.
Not related Directly to story but related to Greater Property Sector in North West
County Londonderry firm’s assets collapse by 90%
http://www.bbc.co.uk/news/uk-northern-ireland-16642843
Property firm reports £22m loss
http://www.bbc.co.uk/news/uk-northern-ireland-16464784
VICTIM OF CROOK’S PONZI SCHEME GOES BUST
http://www.donegaldaily.com/2012/01/14/victim-of-crooks-ponzi-scheme-goes-bust/
Oatfield Site in Letterkenny being offered to Aldi/Lidil for in the Region of 1.6million