Wednesday 21 February 2018

Dundrum discount

The €1bn-plus sale of Dundrum Town Centre will test Ireland's resurgent commercial property market. Three bidders have bid up to €1.6bn for the package of Nama-owned loans, including those secured against Ireland's largest shopping centre.

With a reputed annual rent roll of about €58m, Dundrum Town Centre is very much the jewel in Nama's crown. In 2014, Nama paid Ulster Bank and KBC face value for their loans in a move that gave the state bad bank full control over Dundrum.

Also included in the package of loans being sold by Nama are half shares in the Pavilions Shopping Centre in Swords and the Ilac in Dublin city centre, as well as undeveloped sites next to Dundrum and Ilac. However, all eyes will be on Dundrum Town Centre and the price it fetches.

When Nama first put the portfolio of loans up for sale, it was speculated that Dundrum Town Centre could be worth up to €1.4bn. On a €58m annual rent roll, that would give a yield just over 4.1pc, that always seemed optimistic. CRBE calculates that average super prime shopping-centre yields currently stand at 4.5pc, which would value Dundrum at €1.29bn.

It may not even achieve this value. If reports of a €1.6bn price tag for the entire portfolio are correct, then Dundrum is being valued at about €1.1bn when the other assets included in the sale are deducted - a yield of almost 5.3pc.

So will Nama get the full retail price - or will it have to let Dundrum go at a discount?

Sunday Indo Business

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