We are delighted to share our latest Bannon Retail Pulse.
The ongoing global macro-economic uncertainty is having a significant impact on consumer sentiment. Inflationary concerns coupled with an anticipated rise in central bank interest rates has provided a more uncertain backdrop and is something we will be keeping a close eye on in the coming months.
To view the full report, please click here.
Sustained slide in Irish consumer sentiment points to major reassessment of economic and financial conditions.
The KBC Irish Consumer Sentiment Index slipped again in May for the fourth consecutive month. The previous four occasions this has happened in the twenty-six-year history of the survey reflected circumstances in which consumers faced marked difficulties in assessing potentially momentous changes in economic conditions. The last time the survey slipped for four consecutive months was in the summer of 2019 amid concerns over Brexit.
The current slippage follows the conflict in Ukraine and electricity/gas price hikes of 15-40% implemented by energy providers in the past two months. However, credit/debit card and Retail Sales data do not yet point to any material slowdown in spending, with expenditure on hard hit sectors such as accommodation and hospitality still recovering in May.
We are delighted to share our latest Bannon Retail Pulse. This month we focus on the Food & Beverage Sector where we report on strong take-up and low vacancy across the sector. Our Retail Pulse is updated monthly and all are available on our website bannon.ie.
To view the full report, please click here.
Bannon is delighted to welcome Tipperary Crystal to Stephens Green Shopping Centre.
We wish the team the very best of luck with the opening.
At Bannon we manage over 75 individual commercial assets including Shopping Centres, Retail Parks, Neighbourhood Schemes, Multi Let and Single Let Offices. This represents over 7 million sq.ft of commercial real estate in Ireland, with an estimated value of €2 billion.
Given our involvement and exposure within this industry, we are regularly engaged to assist purchasers with the property management due diligence process associated with large scale property transactions. This process is particularly complex when it comes to the purchase of multi let retail assets.
When concerns are presented, an investor can only then appreciate the importance and benefits of a pre – sale due diligence. It highlights the perils associated with buying an asset and ultimately determines the price they will pay for the asset on closing.
A typical due diligence process will involve several specific fields of expertise, namely: Legal, Tax, Building Surveying, Planning, Sustainability, Property Investment and Management.
Once engaged, Bannon will work closely with the relevant advisors to ensure a thorough review of all property management related topics are analysed. As part of a due diligence process for a commercial property we would typically provide advice concerning the following items;
The list above is dependent on the complexity of the asset in question and can be amended to take account of asset specific variables.
Ordinarily the above information would be readily available from a data room which would be set up by the vendors agent. Once the information is received it takes some time to comprehend and consolidate such a vast quantity of information into a format which is easily understood by both our client and legal representative when negotiating the finer detail on closing of a sale.
In advance of such negotiations, we will equip our client with the findings from the due diligence process, paying particular attention to areas of concern. Common concerns which can arise from a due diligence process include;
If you are considering an investment in a commercial property, please do not hesitate to reach out to a member of the Bannon Property Management team.
Author: Eugene Burns, Associate Director, Bannon
Date: 27th April 2022
An early start this morning for our Bannon retail team for the Completely Retail Marketplace event in London. It has been great to meet people in person to discuss our Landlord and Tenant requirements.
Property valuations tend to be of the ‘bricks and mortar’ variety, i.e. producing a valuation of the physical building either with vacant possession or based on an investment income stream. In addition to these traditional valuations, the Bannon team regularly undertake specialised valuations of a trading going concern. This involves valuing not only the building but also accounting for the value attributable to the business carried on therein. It is a niche aspect of valuation, whereby we, the valuer are required to understand both the property and the business to arrive at a value based upon the marriage of both elements.
Where traditional property valuations are often based upon comparison transactions including lettings and sales which set benchmarks against which a valuation is assessed, the valuation of a going concern is much more nuanced. One of the main impediments to such valuations is that going concerns are rarely openly traded in the commercial markets and therefore tangible comparison evidence is often scarce or completely lacking.
Even were there to be a bountiful supply of comparison transactions, the intricacies of the valuation of a going concern involves a much deeper understanding of the general industry in which the business operates, as well the mechanics of the subject business.
Bannon has carried out many valuations of convenience store and supermarket going concerns for many years. Based on long-established relationships with retail clients, we have a deep understanding of how these businesses function and the key criteria that impact their trading performance. This understanding provides Bannon with the insight to analyse the trading profit and loss accounts of the business. We understand the profitability of the operation based on establishing a sustainable EBITDAR (Net Earnings) position and the route and cost required to achieve that position.
In forming a view on a stabilised Net Earnings position, we review a number of items including but not limited to the following:
After concluding a stabilised Earnings position we then conclude a capitalised value, only after taking account of required capital expenditure and acquisition costs.
A further point that is becoming increasingly important in assessing a business are the ‘Green’ credentials of the building and the operation. Those businesses that have embraced ESG and invested accordingly should see benefits in more efficient operations resulting in cost savings. Businesses that have been slow to move with the times will experience higher costs that will impact the bottom line and reduce operating margins.
The valuation of supermarket going concerns is a highly niche aspect of commercial valuation practice. As market leaders in the retail sector, Bannon is uniquely placed to carry-out such valuations. Contact Ben Semple, Divisional Director and Registered Valuer from the Bannon Valuation Team for more information.
Email: bsemple@bannon.ie
Dated: 13th April 2022
Around 500 jobs are to be created across the island of Ireland by coffee and sandwich chain Pret A Manger.
The company is to open up to 20 shops within the next decade, as part of its entrance into the Irish market.
The outlets in the Republic and Northern Ireland will be rolled out by Carebrook Partnership Limited under a franchise arrangement.
The first shop is set to open on Dawson Street in Dublin this summer, creating 25 jobs.
“Setting up shop in the Republic of Ireland and Northern Ireland has been our plan for a long time, and we’re thrilled that we’re finally able to make it happen,” said Pano Christou, Chief Executive Officer at Pret A Manger.
“There has long been demand from our neighbours on the island of Ireland to bring Pret’s freshly prepared food and organic coffee, and now with the backing of Carebrook Partnership Ltd we’re able to do so.”
“We look forward to making this partnership a success.”
Carebrook Partnership Ltd has worked with Pret for three decades and runs many of its stores in London where it is a common sight on city centre streets.
Carebrook is majority owned by UK and US food sector veteran, Gerard Loughran, who grew up in Nenagh, Co Tipperary.
Ray McNamara from Dublin, who has 25 years’ experience in the Irish food industry and owns Ann’s Bakery is also a minority shareholder.
“We’ve been working with Pret for over three decades, ever since they arrived in London,” said Gerard Loughran, CEO, Carebrook Partnership Ltd.
“Having grown up in Tipperary, and with more than two decades of experience in the hospitality and food industry, I’ve always wanted to bring Pret to Ireland and Northern Ireland, so I’m delighted that this will soon become a reality alongside my co-owner Ray, who has great connections and links to the food sector in Dublin with 25 years’ experience.”
“We look forward to welcoming our new customers, soon.”
Last year Pret announced that it would aim to double the size of the business within five years, including launching into five new markets by the end of 2023.
Pret is owned by investment group JAB and founder Sinclair Beecham.
It currently has shops in the United Kingdom, United States, Hong Kong, France, Dubai, Switzerland, Brussels, Singapore and Germany.
Looking back over the past decade the retail property market has experienced a tumultuous time. Recession following a boom, followed by a resurgence, then the impact of Brexit, Covid, the move to more on-line shopping, and more recently the war in Ukraine. Retailers and the retail property market have been the hardest hit during this period, and it may be some time before the market stabilises. However, one sector within the retail property market has outperformed in the last 3 years.
Retail Parks have come through the past two years’ experience in an even a better position that before. The sector has been the beneficiary of multiple factors.
The closure of other retail outlets funnelled consumer spend into retail warehousing parks as the only outlet for frustrated shoppers. This was helped by the nature of retail warehouse parks versus enclosed shopping centres. As large boxes with plenty of space for social distancing, they offer surface outdoor parking and ease of access for click and collect purchases.
What also helped was the focus on the products that are typically sold in retail parks. There was a perfect storm of an increase in home improvements and outdoor activities being a major focus for Covid bound customers acquiring items such as:
This all led customers to their local retail park.
The Bannon Retail Team has seen this resurgence across our extensive portfolio of Retail Parks that we lease and manage. Car numbers in retail parks are up considerably when compared to 2019 numbers, which is a different story when compared to the reduction in footfall that is being experienced in enclosed shopping centre and city centre environments.
Vacancy rates in retail parks were already low in Q1, 2020. The acceleration of transactions during and after the third Covid lockdown has pushed vacancy rates to a very low percentage. Schemes such as Limerick One Shopping Park and The Retail Park Liffey Valley currently have vacancy rates at a long-term low.
New to market retailers and those slow to expand pre-Covid are now seeking increased representation in the better parks in Dublin and provincial locations. This supply and demand dynamic may encourage owners of retail warehouse parks to start considering expanding their schemes to cater for this renewed demand.
Retailers keen for further expansion include Dutch furniture retailer JYSK, global sports brand Decathlon, Next Home, Homesense, Home Store + More, Party City and EZ Living Furniture/Interiors to name a few. This sector of the retail market will be keeping us busy for the foreseeable future.
Author: James Quinlan, Director, Bannon
Date: 6th April 2022
Agent Bannon is guiding a price of €1.9 million for a community retail investment opportunity comprising four retail units and a standalone creche at Adamstown in west Dublin.
The units, which are below a modern residential development called the Sentinel Building, are occupied by Londis (with a guarantee from parent company BWG), Mizzoni’s Pizza and Pamper Yourself, together with one small vacant unit. The creche is operated by Giraffe Childcare. All of the units are presented in excellent condition throughout and benefit from prominent road frontage.
The annual passing rent is currently €163,375 with substantial reversionary potential. The asking price offers the prospective purchaser an attractive initial yield of 7.84 per cent, rising to a potential double-digit yield on the letting of the vacant unit and the settlement of the outstanding Londis and creche rent reviews. The properties extend to a total floor area of 15,264sq ft and have a weighted average unexpired lease term (Wault) to break of 6.43 years and a Wault to lease expiry of 8.72 years.
The subject units are in the southeast of Adamstown and 750m from Adamstown train station. The surrounding area is predominantly in residential use with a mix of high- and low-density housing. Current population estimates suggest a resident population of about 5,000 and once fully complete this is projected to be 25,000 people.
Ros Tierney of Bannon expects to see “significant interest from investors seeking a high-profile grocery and necessity portfolio with value-add potential through asset management”.
