Hammerson advances plans for Dundrum growth
UK property giant Hammerson is ploughing ahead with plans for a mixed-use development beside Dundrum Town Centre in Dublin after finalising the acquisition last summer of a 50pc stake in the premises.
Hammerson chief executive David Atkins confirmed yesterday that the company had appointed UK firm FaulknerBrowns as the masterplan architect for the second phase of development on a six-acre site beside the shopping centre.
That site already 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 space.
Hammerson acquired 50pc stakes in Dundrum and the Ilac Centre in Dublin city centre in 2015, after paying Nama €1.85bn for €2.6bn worth of loans connected to the developments. Those loans are also held over the Pavilions Shopping Centre in Swords, north of the city. The other 50pc of the Dundrum Town Centre is owned by Allianz.
Hammerson also controls five acres of development land, called Dublin Central, that fronts onto both Henry Street and O'Connell Street.
The company expects to finalise control of a 50pc stake in the Pavilions centre by the summer. The other 50pc of the centre is owned by IPUT and Irish Life. Hammerson's acquisition of the 50pc equity stake in the centre still requires European Commission approval, although that's likely to be straightforward.
At the Ilac centre, Hammerson has already started refurbishment works, with new retailers signed up for four of the five units being upgraded, according to Mr Atkins.
The UK property group - which also owns 35pc of the Kildare Village outlet mall - said that it has already pushed through rent increases in Ireland.
It finalised 10 rent reviews last year with Aldo, Boots, BT2 and others, and secured an averaged uplift of 8pc.
Last month, it settled 21 more rent increases, with an average uplift of 7pc.
Total net rental income generated for Hammerson in Ireland last year was £14m (€16.5m), with £1.5m of that generated from its Dublin Central asset, and the remainder from Dundrum.
Hammerson has previously indicated that Dundrum has the potential to generate annual rent of €93m by 2021.
That's 42pc more than the €65m estimated rental value attached to the centre last year. The group pointed out that it had also hiked the cost of parking at Dundrum by €1 last August to increase revenue from shoppers.
"Non-rental income from car parks and the sale of advertising and merchandising opportunities is a significant source of income growth, and has generated £2.3m (€2.7m) since we secured ownership of the properties," the company reported in its results yesterday.
Hammerson - which has £10bn worth of assets across Europe in countries including Ireland, the UK, France, Italy, Germany and Spain - said that its net rental income rose 8.8pc to £346.5m (€406.8m) last year, and adjusted profit jumping 9.4pc to £230.7m (€270.8m).
However, its adjusted net profit excludes non-cash, downward revaluations, meaning its non-adjusted net profit actually fell 56pc to £321m (€377m).
Goodbody Stockbrokers said that with capital values declining across a large portion of Hammerson's UK portfolio, its Irish assets provide an "important hedge" for the group.