Tuesday 12 December 2017

Dundrum owners raise €625m loan against the €1.5bn mega-mall

Massive Dundrum Town Centre mall attracts about 19 million shoppers per year
Massive Dundrum Town Centre mall attracts about 19 million shoppers per year
John Mulligan

John Mulligan

UK property giant Hammerson is highly unlikely to make a bid for the €233m Square shopping centre in Tallaght, according to industry insiders, as it focuses on its existing Irish portfolio.

Hammerson announced yesterday that the Dundrum Town Centre, which it owns equally with German insurer Allianz, has been valued at €1.5bn on foot of a major €625m refinancing of debt attached to the mall in south Dublin. Hammerson's share of the loan is €312.5m.

Hammerson and Allianz confirmed the €625m, seven-year term loan is secured against the Dundrum centre.

Hammerson, a FTSE-100 member, acquired 50pc stakes in Dundrum and the Ilac Centre in Dublin in 2015, after Nama was paid €1.85bn for €2.6bn worth of loans connected to the developments. Those loans are also held over the Pavilions Shopping Centre in Swords. It's likely that Hammerson will receive competition clearance soon for the acquisition of a 50pc stake in the Pavilions.

Last November, Hammerson raised £400m via a private placement in the United States to repay short-term debt associated with its acquisitions made in Dublin and Birmingham.

During the first half of this year, Hammerson also made the final repayment on and cancelled a €1.5bn short-term facility used to fund the acquisitions in Ireland and Birmingham. Hammerson said yesterday that its share of net proceeds from the new €625m term loan will be used to reduce drawings under its revolving credit facilities.

Dundrum Town Centre is the largest asset in a portfolio which Hammerson and Allianz invested in during October 2015 as part of a long term investment strategy in Ireland.

The 123,800 sq m centre is 99pc occupied and generates total passing rent of circa €66m a year. It attracts about 19 million shoppers a year. Hammerson has previously indicated that Dundrum has the potential to generate annual rent of €93m by 2021. BNP Paribas and DekaBank acted as lead arrangers and Allianz Real Estate acted on behalf of a number of Allianz companies in relation to the new €625m facility.

"Given the high calibre of the underlying asset of Dundrum Town Centre we saw strong demand for this loan and hence have secured attractive pricing at a historically low coupon," said Hammerson group treasurer Richard Sharp.

"We continue to actively focus on reducing our cost of debt, benefiting from a wide range of funding sources, mostly unsecured but also secured debt in selective circumstances with our joint venture partners."

The non-recourse facility is repayable in full at maturity in September 2024 and the interest cost is expected to be less than 2pc. In July, Hammerson said that the Dundrum centre had boosted the group's performance during the first half of the year, with adjusted profit rising 6pc to £119.4m in the period. Its revenue from Dundrum increased partly due to an increase in parking charges imposed at the mall.

Earlier this year, Hammerson chief executive David Atkins said the company had appointed UK firm FaulknerBrowns as the masterplan architect for the second phase of development on a six-acre site beside Dundrum.

That site has permission for the construction of 100,000 sq m of additional retail space, but Hammerson indicated last year that a mixed-use development might be more suitable.

The company is more likely to press ahead with a scheme that will be led by apartment construction, but include retail.

Irish Independent

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