AIB has appointed receivers to The Square Town Centre in Tallaght as it moved to protect its interests as main lender to the landmark retail complex in Dublin, after a sale of the business for a knock-down price stalled.
The bank is understood to have more than €140 million of loans out against the centre. The appointment of Kieran Wallace and Eamonn Richardson of Interpath Advisory as joint receivers has been made with the consent and co-operation of the complex’s owner, US investment firm Oaktree Capital.
The owners of the independently-owned units or tenants at the centre will not be affected by the receivership, according to Interpath. Retailers at The Square, which is managed by Sigma Retail Partners, include Dunnes Stores, Penneys and doughnut chain Krispy Kreme.
Texas-based real estate investment firm Hines was selected by Oaktree in early March as the preferred bidder for The Square for a price in the region of €125 million, which was well off the price tag of between €160 million and €170 million that had been put on the shopping centre when it was placed on the market last year.
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The lower price meant AIB was going to take a haircut on what it was owed, while a junior lender to the complex, M&G Investments, faced losing its investment.
The collapse in the value of the asset since then reflects a wider downturn in retail property assets in recent years
Sources said AIB had grown increasingly frustrated by the pace at which the Oaktree process with Hines had been progressing before appointing the receivers.
Oaktree paid the National Asset Management Agency (Nama) €250 million in 2019 for 90 per cent of the centre, which has 130 retail units and a 13-screen cinema distributed across 53,000sq m (570,486sq ft) of space, along with planning permission to extend and a site potentially suitable for housing. AIB backed the Oaktree deal.
The collapse in the value of the asset since then reflects a wider downturn in retail property assets in recent years, as the pandemic accelerated the trend of online shopping and as rising interest rates hit the wider real estate sector.
The Square, which opened in 1990, was valued at about €640 million in 2007 when developer Noel Smyth bought a portfolio of 68 shops in the centre, the equivalent of more than half of the complex.
It is believed that Hines remains interested in the deal, as is the underbidder, Eagle Street Partners, a European developer set up by Irishman Shane Scully and the late Justin Bickle, co-founder of housebuilder Glenveagh Properties.
Some earlier-stage bidders – the Oaktree process had been the subject of a highly-unusual four rounds of offers – are also expected to re-emerge under a new sale managed by the receivers.
These are said to include property developers Ardstone, which owns the Citywest Shopping Centre in Dublin, and businessman Eamon Waters, who has been very active in recent years buying property around the capital after selling his majority stake in the company behind the Panda and Greenstar waste firms.
It had been speculated in property circles that one sticking point in Oaktree and Hines coming to an agreement was the time it would take – and inherent risks involved – for the deal to be assessed by the Competition and Consumer Protection Commission (CCPC).
Hines is the asset manager of the Liffey Valley shopping centre in west Dublin on behalf of its German pension fund owner, Bayerische Versorgungskammer. The US group had also planned to build a retail complex as part of its development of the Cherrywood Town Centre in south county Dublin – even if that element of the scheme is currently under review.
However, sources close to Hines say it is unlikely that a purchase of The Square would lead to any big competition issues as it has no equity stake in the Liffey Valley Centre, while the Cherrywood Town Centre has not yet been built and retail element faces uncertainty.
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