Shopping CentresAthlone Town Centre, which is due to open in three weeks, is to be offered to investors through a syndicate created by CPI-Property which claims it is one of the last major property developments in the country with significant tax incentives.
The €345 million centre qualifies for capital allowances which will allow investors to shelter rental income from all sources within the country.
The centre has been acquired by CPI-Property, an associate company of Corporate Finance Ireland Ltd which has arranged more than €1 billion of property syndications over the past decade, including units in the IFSC and the Square in Tallaght.
"This is the last major development to have very significant capital allowances attached to it," says John Moran of Jones Lang LaSalle, which is advising CPI-Property on the acquisition of the centre. "The allowances are available to be used by investors in 2007 and carried forward if required. It will appeal to those who have traditionally sheltered their rental income through Section 23 residential units but who are keen to diversify their portfolio away from purely residential property."
Athlone Town Centre will be the second major shopping mall in the town and has raised questions about whether the local population is large enough to sustain both, as well as a third older and smaller shopping centre and the town's traditional shopping streets. A study by the Javelin Group noted that the opening of the centre will place Athlone in fifth place in the national retail rankings, coming after the country's main cities and pushing it ahead of places like Waterford, Tralee and Swords.
The centre has already attracted a strong line-up of tenants, including international retailers who have only had a presence in the country's major cities up to now. It will have 67 retail units and tenants already confirmed include Marks & Spencer, River Island, Zara, Next, H&M, Oasis, Coast, Tommy Hilfiger, Monsoon, Vero Moda, Jack n Jones, Virgin, Esprit and Clarks. It is expected to have an annual rent roll of €11.67 million.
Investment in the syndicate is on the basis of units of 0.33 per cent which require an equity contribution of €333,333. Finance is being offered to suitable investors by the promoters, Ulster Bank Wealth and the Sherry Fitz-Gerald Group.
The CPI-Property proposal will provide investors with a 4 per cent yield, based on the predicted initial rents and excluding the effect of the capital allowances. "The yield compares well with that for shops generally in Dublin and other town centre locations and rents are expected to grow steadily over the years," Moran says. "In addition to benefiting from the valuable allowances in 2007 and the years ahead, investors will also own the underlying shopping centre which will be sold at the end of the useful tax life and the proceeds distributed amongst the syndicate members."
