Tuesday 6 December 2016

Dundrum Town Centre owner raises €468m to fund deals

Published 23/11/2016 | 02:30

Dundrum Town Centre
Dundrum Town Centre

Dundrum Town Centre co-owner Hammerson is expected to receive the all-clear from the European Commission next month for its acquisition of a 50pc stake in Dublin's Ilac shopping centre.

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The expected ruling comes after UK-based Hammerson said yesterday that it has raised £400m (€468.2m) via a private placement in the United States to repay short-term debt associated with its acquisitions this year in Dublin and Birmingham.

Hammerson made its first foray into Ireland this year.

It moved to acquire 50pc stakes in Dundrum, the Ilac, and the Pavilions - all in Dublin - after agreeing to pay €1.85bn for €2.6bn worth of loans connected to the developments.

Hammerson and German insurer Allianz acquired the so-called 'Project Jewel' loans from Nama, with all of the loans associated with developer Joe O'Reilly and his firm, Chartered Land.

Irish Life owns the other 50pc of the Ilac. Irish Life also owns 25pc of the Pavilions, with IPUT owning another 25pc.

Hammerson also secured sole ownership of a prime Dublin city centre development area, and development land beside the Pavilions.

In February this year, the European Commission approved the acquisition of joint control of Dundrum Town Centre by Hammerson and Allianz.

Hammerson has now notified the Commission of its intention to acquire a 50pc stake in the Ilac. It has yet to formally notify Brussels of its intention to acquire the 50pc stake in the Pavilions.

Hammerson told investors in Dublin in September that Irish Life had waived its pre-emption rights in relation to the Ilac, and that the pre-emption engagement with Irish Life and IPUT in relation to the Pavilions in Swords, north of the city, had begun.

The Commission has set a provisional deadline of December 20 for a decision on Hammerson's acquisition of the 50pc stake in the Ilac.

The US placement announced yesterday will be used to repay short-term bank facilities used for the acquisitions in Dublin, as well as the purchase of the Grand Central shopping centre in Birmingham, which Hammerson bought at the beginning of the year for £335m.

This week, Hammerson received regulatory approval from Brussels for a joint venture that sees it sell a 50pc stake in the Birmingham asset to Canada Pension Plan Investment Board.

Hammerson chief financial officer Timon Drakesmith said the US placement locks in long-dated funding at all-time low interest rates.

It's the second time that Hammerson has raised debt in the United States, having previously done so in 2013.

"We believe this is the largest ever private placement for a UK property company," he said of the latest debt round.

Investors in the UK also took part in the financing.

The new debt has maturities of seven, nine, 11 and 14 years.

The fixed-rate notes included €177m, £50m, and $232m, with the US dollar portion being swapped to €210m of fixed-euro, according to Hammerson. The weighted average coupon, or interest rate, is 1.7pc.

In a presentation to investors in Dublin in September, Hammerson noted that Dundrum Town Centre is now the largest shopping centre in its portfolio, and the second-busiest, with a footfall of 18.3 million people a year.

The centre generates passing annual rent of just under €60m.

Irish Independent

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