Thursday 23 March 2017

Developer Joe O'Reilly's role with Dundrum retail Mecca in question

Ronald Quinlan Special Correspondent

UNDER THREAT: Chartered Land boss Joe O’Reilly
UNDER THREAT: Chartered Land boss Joe O’Reilly

Developer Joe O'Reilly's future involvement in Dundrum Town Centre is under threat following Nama's selection of UK property giant Hammerson and Allianz as preferred bidders for Project Jewel, a portfolio of prime retail developments and land owned by the Chartered Land chief.

Even as news of Nama's sale of the loans securing the south Dublin shopping Mecca was breaking last Tuesday morning, Hammerson chief David Atkins was telling investment banks of his company's plans to secure full ownership of Dundrum from Mr O'Reilly's company by the middle of next year at the latest.

In the course of a 7.30am conference call with analysts from JP Morgan, UBS, Morgan Stanley, Barclays and others, Mr Atkins made Hammerson's intentions abundantly clear.

"I think it's fair to say we are very confident of ultimately acquiring the real estate," he said.

"We've done a significant amount of work around that. This is a fairly well-trodden path in regards to loans that are in default."

Note: [There is no suggestion that Mr O'Reilly is in default on his loan repayments. It is however possible that his new lenders could seek to trigger such an event by demanding repayment in full immediately, which they are entitled to do.

Were Mr O'Reilly unable to repay immediately or refinance his debts in full he would be in default, leaving it open to Hammerson to move against him.]

Mr Atkins pointed out that Hammerson had already used this approach after it acquired the Whitgift shopping centre in Croydon from the IBRC's special liquidators for €110m in a joint venture with the Australian shopping centre owner and developer, Westfield Corp. While the Hammerson chief said his company would look to do a "consensual deal" with Mr O'Reilly once it had completed its €1.849bn acquisition of the €2.6bn par debt securing the Project Jewel portfolio, he stressed that there was "a plan B" involving the legal route of enforcement.

Mr Atkins added: "We're very confident of that [legal enforcement] should that be needed. That would take a little bit longer.

"But even in that regard we would anticipate getting access to the real estate by the middle of next year."

Apart from Dundrum, Project Jewel consists of ownership interests in elements of the ILAC Centre in Dublin city centre and the Swords Pavilions shopping centre.

Turning to the matter of managing Dundrum Town Centre into the future, Mr Atkins noted that 90pc of its existing tenants were still subject to upward-only rent reviews, notwithstanding the Government's amendments to the legislation that will see rents for new tenants rise and fall in line with prevailing market conditions.

Mr Atkins told analysts that Hammerson anticipated rental growth at Dundrum to be in the region of 15pc, a figure that would bring it more into line with Grafton Street, where average rents were currently some 30pc higher. Asked about the overall development potential of the Project Jewel portfolio, Hammerson's Director of Business Improvement, Simon Betty, highlighted the range of opportunities available at Dundrum phase 2 - the site of the original and adjacent Dundrum centre.

Sunday Independent

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