A blue chip investment that “ticks every single box”, is likely to sell for over €2.5m, and is described as “probably the finest investment to come to the market in a very long time”: it’s on offer for sale by tender next month, with a €165,000 rent roll p.a. paid by McDonald’s Restaurants, Ireland.
Fresh to market for the first time ever is the purpose-built McDonald’s Drive Thru on the new Mallow Road in Cork city’s Blackpool, at a junction of the N20 and Fitz’s Boreen, which trades exceptionally well, and has high visibility of a busy northside road out of the city.
It’s for sale for a private investor owner with estate agents Brian Olden and Rob Coughlan of Cohalan Downing Associates, was built in 2000 and has 17.5 years left to run on a 35-year lease, with no break clauses. And, it’s subject to five-year reviews and with upward only review clauses, giving it added appeal to a wide mix of investors, from private individuals to institutions and funds.
Trading in Ireland since 1977, McDonald’s Restaurants of Ireland has over 80 Irish restaurants, employs over 4,000 and in 2015 had a turnover close to €85m, with post-tax profits of €10.4m.
No guide price is quoted in the Cork restaurant investment sale by tender on September 28, but the expectation is that it will top €2.5/2.6m, at which level it would show a return close to 6.3% to its eventual purchaser.
It compares favourably to last year’s sale of another McDonald’s investment in Cork city centre, where a property on Winthrop Street earning €372,000 p.a. sold, also via Cohalan Downing, for c €5.5m, to a fund, Davy Real Estate, with a return of 6.4%. Its private vendor, living abroad, had bought the Winthrop Street property only in 2014, for €4m. That lease, from 1985, is due to expire in 2020, in contrast to the length of time left on the McDonald’s lease in Blackpool, good until May 2035.
Here, the purpose-built c3,300 sq ft drive-thru on a 0.8 acre corner site, with two access points “has recently undergone a substantial franchise update refurbishment representing a significant investment in fit-out by the tenant. The condition of the offering is immaculate throughout the property,” says CDA’s Brian Olden.
The northside location, alongside a busy Topaz, has a mix of strong residential profile, as well as business parks such as JCD’s North Point, retail warehousing, and proximity to Blackpool Shopping Centre and Retail Park where tenants include Next Home, Dunnes, Woodies, Argos, Maplin, and Aldi.
It’s one of five McDonald’s in Cork, with the latest opening last year at Kinsale Road/Tramore Road, and is one of two McDonald’s in Blackpool: the other is in a shared building within Blackpool Shopping Centre, next to the Retail Park.
Guided at €117m, that investment has income of €7.38m and a return of 6%. It was bought by Varde as part of the €170m Project Acorn portfolio, which included Clonmel’s Showgrounds development as well as Millfield Shopping Centre in Balbriggan.
Varde also acquired Douglas Court Shopping Centre in Cork, which it is also expected to off-load in coming months.
Sources say that the Blackpool investment is under negotiation, with considerable interest shown, including from the US.
The privately-owned Varde Partners separately acquired Douglas Court Shopping Centre as part of the €160m Spectrum portfolio, which comprised six national shopping centres and offices. Douglas Court has a rental income of €3.8m, and both Blackpool and Douglas Court have further rental uplift and development potential.
In contrast to those two sizeable chunks of Munster retail investments, McDonald’s on the N20 is a mere drive-by snack.
Cohalan Downing Associates 021-4277717
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