French investor pays more than €10m for Rathfarnham retail scheme

French investor Iroko ZEN has entered the Irish investment market with a €10.14 million deal for a newly built and fully let retail scheme developed by Ardstone in south Dublin.

Located on Stocking Avenue in Rathfarnham, the White Pines retail centre comprises a purpose-built supermarket and a three-storey creche building located on a 1.98 acre (0.804 hectare) site and forms part of a major residential scheme developed by Ardstone featuring a mix of one- to four-bedroomed units catering for up to 636 families on an overall site of 36.3 acres (14.7 hectares).

The supermarket extends to 1,470.9sq m (15,833sq ft) and is fully let to Tesco Ireland Limited on a 20-year full repairing and insuring (FRI) lease with an annual passing rent of €477,600 with rent reviews every five years. Tesco has been trading since February of this year and has 69 car parking spaces on site. The creche, extending to 590.9sq m (6,361sq ft), is let on a 25-year FRI lease to Safari Childcare Limited at a rent of €108,821 per annum also subject to five-yearly rent reviews. The creche is due to commence trading in September 2023 in line with the academic year once its fit-out is complete.

The purchase price of €10.14 million will provide Iroko ZEN with a net initial yield of 5.28 per cent and, allowing for break options, a weighted average unexpired lease term of 9.8 years. The property has an A Ber rating, has been built to the highest sustainability standards and therefore has strong ESG [environmental, social, and governance] credentials, which is an ever-growing requirement for institutional investors.

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Iroko ZEN is a French SCPI (Société Civile de Placement Immobilier, or private investment company set up for the purpose of buying and managing real estate) which manages around €90 million of assets in retail, logistics, health and offices, in France, Spain, Germany and Ireland comprising a portfolio of 30 properties. Iroko ZEN is also closing its first deal in the Netherlands.

Iroko ZEN is just one of a growing number of French investors who are becoming active in Ireland. Its investment follows a broader European trend where investors are seeking higher relative returns compared notably to logistics and residential properties.

Peter Love of Cushman Wakefield handled the sale on behalf of the vendor while Kenneth Rouse of BNP Paribas Real Estate advised the purchaser.