Blackstone was ‘the sole final bidder’ for the Blanchardstown Centre, one of Dublin’s leading shopping centres, according to a property analyst close to the deal.
The private equity giant confirmed this week that it had acquired the shopping centre in north-western Dublin from Irish developer Green Property Ventures for its Blackstone Real Estate Partners IV fund, in one of the biggest retail deals in the country’s history. While Blackstone did not disclose the purchase price, analysts have estimated that the Blanchardstown Centre sold for just below €950 mln.
‘In the end, Blackstone was the sole final bidder,’ the analyst said. ‘While two other companies were also interested, Blackstone was the only one to submit a final bid. I suspect that this is due to the size of the deal. You have to be looking at an exit price of around €1.4 bn once you factor in the development potential of the site. That’s massive by Irish standards, given that in a typical year, there are around €2.5 bn in commercial property deals - across all sectors.’
Blackstone now has the option of developing an additional 150,000 m2 at the site, including retail and leisure facilities. Multi Corporation, Blackstone’s pan-European retail platform, will manage the centre once the deal closes this summer, pending regulatory approvals. The centre, which opened in 1996, comprises 110,000 m2 of retail space across more than 180 stores, including H&M and M&S, as well as a nine-screen cinema and an 188-bed five-star Crowne Plaza hotel.
The two other interested parties are understood to have been Chartered Land, owned by Irish developer Joe O'Reilly, and backed by equity from Morgan Stanley, and Canadian pension fund CPPIB. If its bid had succeeded, the deal would have marked CPPIB’s first foray into the Irish retail market. CPPIB declined to comment. Chartered Land could not be reached for comment.
‘This is a further investment by us in Dublin and underlines our commitment to Ireland and belief in the strength of its economy,’ Anthony Myers, head of European real estate at Blackstone, said in a statement.
'Exceptional' year
The Blanchardstown Centre has an annual footfall of more than 16 million people and a rent roll of around €50m per year. The existing development and surrounding land comprises 35 hectares with up to 6,000 surface car parking spaces.
Last year was an ‘exceptional’ year for Irish retail, according to Larry Brennan, chair of Savills’ continental European retail group. ‘This year, we’re seeing good growth in terms of occupier and business confidence. Mid-market high street brands are performing exceptionally well. Retail sales are on the rise and consumer sentiment is very positive.’
Over the last three years, retail has accounted for a steadily increasing share of the investment spend in Ireland, according to Savills’ Investment Market Annual Report published this month (June). Just over €1.1 bn worth of shops were traded in 2015, representing 29% of sales by value. This compares with 24% in 2014 and 8% in 2013. So far this year, retail sales have accounted for an even bigger share of the market, with retail accounting for 35% of turnover between January and the end of March, according to the report.
This shift towards retail investment comes on the back of falling unemployment, increased earnings and tax cuts, which has led to an improvement in domestic demand for eight successive quarters, according to the report. As a result, the overall retail ERV index has risen by 8.6% in the year to March 2016, while prime locations have seen greater increases, according to Savills. In addition, MSCI data shows that prime retail yields are currently 83bp higher than office yields in Ireland.
For other investors eyeing Irish retail, some interesting centres are coming up for grabs. Next week, Savills will put the Navan Shopping Centre north of Dublin on the market for €60 mln, according to Domhnaill O’Sullivan, a director at Saviils in Ireland. O’Sullivan described it as a ‘dominant shopping centre’.
And if the UK votes to leave the EU on 23 June, it could benefit the Irish real estate market, according to one analyst who asked not to be identified. He told PropertyEU: ‘It’s going to come down to employment and how that it affected in Ireland. However, Ireland is a natural landing pad for US investors looking at Europe, so a Brexit could actually benefit Ireland, if some investors shift their interest away from the UK to Ireland.’
