Tuesday 21 November 2017

UK property giant closes in on control of prime Dublin assets

Property group Hammerson aiming to finalise acquisition of 50pc of Dundrum Town Centre
Property group Hammerson aiming to finalise acquisition of 50pc of Dundrum Town Centre
John Mulligan

John Mulligan

UK property group Hammerson expects to finalise its acquisition of 50pc of Dundrum Town Centre by the summer and continues to see the potential for a landmark of "international importance" in the heart of the capital.

It's also eyeing a mixed-use development beside the Dundrum Town Centre, rather than the retail-only extension for which planning permission was previously granted.

A deal last year with Nama saw Hammerson and the property arm of German insurance giant Allianz agree to pay a total of €1.85bn to buy €2.6bn worth of loans attached to Dundrum, the Pavilions Shopping Centre in Swords, Co Dublin, as well as the Ilac Centre in the city centre.

Under the terms of the deal, Hammerson and Allianz will each own 50pc of the landmark Dundrum asset.

Hammerson secured sole ownership of the 50pc stakes in both the Ilac and the Pavilions that were sold, as well as development sites adjoining each of the three assets.

Talks with the original borrowers of the loans sold by Nama are continuing, and Hammerson chief executive David Atkins said those negotiations are "positive".

"This is a live transaction," he said. "We are in active and positive dialogue with the borrowers. It's a complex transaction. We have a number of counterparties, a number of loans and a number of assets. But we are confident of converting the loans to real estate by the summer of this year."

At Dundrum, Hammerson will have control of a six-acre site called Dundrum Phase 2, for which planning permission was previously granted for over 1.1m sq ft of retail, dining and leisure facilities. But Hammerson indicated yesterday that this plan is likely to be revisited.

"We believe this site offers a better opportunity to bring forward a mixed-use development," it said, adding that it wants to become Ireland's "leading retail property owner".

Hammerson and 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.

Hammerson reiterated that it sees huge potential for the city centre development site it acquired.

It extends over 5.3 acres, and the company highlighted it as one of the "largest and best-positioned urban development sites in Europe".

It includes property on Henry Street, Parnell Street, Moore Street and O'Connell Street.

"The site offers the flexibility to pursue numerous development scenarios and deliver a modern landmark of international importance that is sympathetic to the neighbourhood's history," it added. The site was assembled over a 10-year period.

It's likely to be some time, however, before such plans emerge. Hammerson currently has a number of major projects underway in the UK, in London, Leeds and Southampton.

The other half of the Ilac Centre is owned by Irish Life.

Henry Street is the busiest shopping thoroughfare in the country, with an annual footfall of about 30 million people.

The other 50pc of the Pavilions shopping centre is also owned equally by IPUT and Irish Life, but Hammerson will have sole control of the adjacent 16-acre development site, for which planning permission was previously granted for a huge, 1.2m sq ft extension.

Hammerson also owns a 38pc stake of Kildare Village, the successful retail destination that last autumn opened a €50m extension last autumn. It increased its stake in the property from 14pc last year at a cost of £12m (€15.5m).

The remainder of the village is owned by UK-based Value Retail, which controls other retail villages in Europe.

Mr Atkins said Kildare Village had a "particularly spectacular" year in 2015, with sales growth of 26pc, helped by the positive economic backdrop and the opening of the extension. More than three million people visited Kildare Village last year.

He also said that rents have continued to improve at Dundrum.

The chief executive said that Tommy Hilfiger moved to a new, larger store in Dundrum during the year, resulting in the retailer paying 29pc more rent there.

Hammerson reported full-year results yesterday.

Its like-for-like net rental income rose 2.3pc to £318.6m (€413.7m), and profit, including valuation changes, were 4pc higher at £726.8m (€943.8m). Its adjusted profit climbed 21pc to £210.9m (€273.8m).

Irish Independent

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