About half a dozen parties chased Tesco Ireland's distribution facility in north Dublin - one of Ireland's largest warehouses with an area of 18 acres under cover - but it eventually sold for less than its guide, says Jack Fagan

An investment syndicate - which was assembled by business services giant KPMG - has paid around €116 million for a newly built distribution warehouse facility for Tesco Ireland in Donabate, north Co Dublin.

The deal will show an initial yield of 5.5 per cent.

Tesco's selling agent, DTZ Sherry FitzGerald, had been seeking over €120 million for the 46-acre property which will be leased back by the British supermarket multiple for 25 years.

About half a dozen bidders for the investment included some from the UK because of the strength of the covenant, the length of the lease and the fact that the rent is index linked.

Finnegan Menton advised KPMG.

The warehouse is one of the largest in Ireland with an area of 18 acres under cover. The centre extends to 72,434sq m (780,000sq ft) and cost more than €80 million to develop. It was completed last summer.

There are 600 car-parking spaces on site as well as a fuel island. The company will pay an initial rent of €7 million a year with annual reviews linked to the consumer price index up to a maximum of 3.5 per cent.

One of the conditions of the sale is that Tesco would be allowed to extend its facilities in Donabate or construct new buildings without the need for landlord consent.

Tesco has 26 per cent of the Irish grocery trade market and is in continuous competition with Dunnes Stores for new trading opportunities.

With few new shopping centres due to open over the next year or two, the two companies are likely to concentrate on opening smaller scale stores in good suburban locations or towns which are expanding rapidly.