Dundrum Town Centre fails to hurt local rival owned by Ronan
The growth and popularity of the Dundrum Town Centre has failed to dent its nearest retail rival in south Dublin, Stillorgan Shopping Centre, owned by Treasury Holdings, according to an investor's report.
Dundrum, owned by developer Joe O'Reilly and funded by an Anglo-led banking syndicate, was one of the biggest development projects of the boom. Retail analysts speculated it would crush local rivals.
But a report on the debts held by Treasury Holdings -- which was founded by shareholder Johnny Ronan -- suggested older centres like Stillorgan have proven more resilient. The report is by Standard & Poor's.
"Local competition has increased since 2005 due to the opening of the Dundrum shopping centre,'' it stated. "However, as the two centres offer contrasting retail facilities, they share relatively few tenants.
"Rental income at the Stillorgan shopping centre has suffered less than may have been expected,'' stated the report.
Dundrum, which boasts leading branded stores like House of Fraser and Hamleys Toy store, is also competing with other local rivals like Nutgrove Shopping Centre in Rathfarnham and the Frascati Centre in Blackrock, Dublin.
It is not known what impact Dundrum has had on these shopping centres.
The success or failure of Stillorgan is vitally important to Treasury, which is currently locked in drawn-out discussions with NAMA. However, it has managed to reach a memorandum of understanding with the agency.
A number of tenants paying money to Treasury have gone bust, the note makes clear, but replacement tenants have been found, although often at lower lease terms.
"Although all of the leases in the portfolio have upward-only rent reviews, existing tenants have also been able to negotiate lower rents in exchange for not exercising their break clause options,'' it stated.
"This is not unusual in the current economic climate."
The agency remains concerned over the loan, although it strongly emphasises that it is currently being paid as per schedule.
"Although we think it unlikely that the loan will default during its term, we consider there to be a real risk that it will default at maturity in 2013,'' it stated.
The properties underpinning the loan were once worth €500m, but have dropped to about €291m at the end of February.
The agency claimed the price fall means it will be hard to sell the properties to clear the loan or to re-finance the loans themselves.