French investor pays close to €21.5m for Galway building

Fully let and generating total passing rent of about €1.87m, the price equates to a yield of around 8pc.

The purchaser is understood to be a French investment fund. A number of these funds have been purchasing Irish properties in recent years at prices which equate to yields of more than 7pc.

The mixed-use 80,000sqft building is located at the northern edge of Eyre Square

The vendor was the insurance and investment group Aviva, which acquired the property when taking over Friends First in Ireland. Friends First bought it in 2018 for around €22m and at the time it generated an annual €1.5m rent roll.

The deal further boosts the second quarter performance of the Irish investment market, as it was completed after the provisional figures for the quarter showed as much as €472m worth of property changed hands – which is almost three times the level of trade seen in the first quarter.

The mixed-use 80,000sqft building is located at the northern edge of Eyre Square and was completed in 2008.

TK Maxx has 3,716sqm (40,000sqft) of retail space, while the office accommodation of 1,951sqm (21,000sqft) is home to the European headquarters of US tech company MathWorks, which has been in occupation since late 2016 and expanded into the reminder of the office space in 2022 as part of the company's growth strategy.

The guide price reflected an underlying capital value of €265 per square foot

The investment also includes a gym operator trading as Snap Fitness at part ground floor and basement levels, while the upper floors from the third to fifth floor level is operated by the Western Hotel as an aparthotel, with a total of 17 self-catering units with access to external terraces offering views over the city and Galway Bay.

Joint agents TWM and Savills managed the sale in a relatively short four-month period as it was launched on the market as recently as the end of February last.

At the time of its launch it had a weighted average unexpired lease term of 6.6 years to the nearest break option and about 8.7 years to lease expiry.

As much as 61 pc of its income is secured by upwards-only or index-linked leases.

The guide price reflected an underlying capital value of €265 per square foot, which is significantly below the reinstatement value of the building and its three levels of basement car parking.