UK REIT Hammerson and German investor Allianz has secured ownership of Dundrum Town Centre, Ireland’s top shopping and leisure destination nine months after having acquired the loan backing the asset as part of their €1.85 bn Project Jewel portfolio acquisition.
A 50-50 joint venture of Hammerson and Allianz announced in October last year that it had signed an agreement with Ireland’s National Asset Management Agency (Nama) to buy the loan package for €1.85 bn, representing a 28% discount to the face value of €2.57 bn.
Under the joint loan-to-own strategy, Hammerson agreed to buy Dundrum jointly with Allianz while also taking over a number of other retail assets used as collateral in the portfolio, namely the 5-acre Dublin Central Development site, 50% of the 15,000 m2 Ilac Centre, 50% of The Pavilions, a 46,000 m2 regional mall in Northern Dublin, and the 16-acre Pavilions development site with planning permission for a 110,000 m2 mixed-use development. The assets were sold by the borrower, developer Chartered Land.
In total, including Dundrum, Hammerson's portfolio of Dublin assets will encompass over 200,000 m2 of high-quality shopping centre space with a further 27 acres of development land.
On completion, Hammerson's total consideration for its share of the portfolio, including fees, taxes and transaction costs, will be €1.23 bn , in line with expectations at the time of acquiring the loans. The acquisition equates to an initial yield of 4.0% and a reversionary yield of 4.6%.
Hammerson's CEO, David Atkins, commented: 'Having successfully reached an agreement with the borrowers, this portfolio provides us with a unique opportunity to enter the Irish market. Acquiring Dundrum, one of Europe's leading shopping destinations, is a game-changing step for Hammerson and increases the diversification of our prime European retail property portfolio.'
'We see this transaction as a valuable opportunity to invest in the Irish real estate market and diversify our portfolio into a high-growth European economy as part of our global investment strategy,' added Annette Kröger, CEO of Allianz Real Estate Germany.
Opened in 2005, Dundrum is located 5 klm south of Dublin and extends to 140,000 m2 and is anchored by four department and flagship stores (House of Fraser, M&S, Harvey Nichols and Penneys) alongside a Tesco superstore, 120 retail shops, 38 restaurants, a 12-screen cinema and 3,400 space customer car park. Dundrum has won over 30 industry awards and is Ireland’s only super prime regional shopping centre. It generates €60 mln in rents a year. The scheme also offers a development opportunity as it is adjacent six acres of land with planning for a 110,000 m2 retail-led scheme.
Hammerson will asset manage the centre on behalf of the Allianz joint venture.
To support the new Irish platform and Hammerson's role as asset manager, the company said it has opened a new office in Dublin, headed by Simon Betty, director of Retail (Ireland). Around 130 employees who have been working together on the assets to date, will transfer across to Hammerson.
