The much-delayed international sales campaign to find a buyer for Ireland's most valuable real estate asset, Dundrum Town Centre in south Dublin, is finally to get under way on Monday.
US commercial property sales brokerage Eastdil Secured is geared up to open an online repository with all the essential information on the €1.4 billion-plus sale, which will be made available to specific funds only after they have completed legally binding non-disclosure agreements.
The Project Jewel loan sale will also cover other properties including 50 per cent stakes in the Ilac shopping centre in Dublin city centre and The Pavilions shopping centre in Swords, as well as an extensive Dublin Central retail site running from O'Connell Street back to Moore Street and Henry Street, which is believed to have been assembled at a cost approaching €400 million. There is considerable confidence that Dundrum will be of interest to a variety of sovereign funds from areas such as the Middle East, Far East, the United States and Canada and overseas institutional investment funds, which will see the retail complex as a long-term play rather than one to be flipped on as soon as values have recovered. A number of British and American Reits were last night reported also to be interested.
However, no one will be surprised if funds such as Blackstone and Hines are also in the running after buying up a range of distressed properties in Ireland which are already showing significant capital appreciation.
It is thought unlikely that Irish funds such as Irish Life, IPUT, Green REIT or Hibernia REIT will pitch alone or alongside a partner for control of Dundrum because of the high value involved. However, some of these groups may well be interested in peripheral investments such as Swords, the Ilac and Dublin Central if, as expected, they are sold on by the new owners. Irish Life already owns a 50 per cent stake in the Ilac while it and IPUT share another half share in Swords.
Discounted rents
Dundrum Town Centre is producing rents of about €58 million for Joe O’Reilly’s
Chartered Land
which completed the centre in 2005. The company was possibly the only one during the recession to have achieved rent increases of between 50 and 100 per cent because many of the shops had been pre-let at discounted rents before the centre was built.
The result is that Dundrum now has Zone A rents of about €4,305 per sq m (€400 per sq ft) compared to about €2,690 per sq m (€250 per sq ft) in Blanchardstown Town Centre.
House of Fraser is the largest tenant in Dundrum, paying about €2.5 million for 13,066sq m (140,000sq ft) while Marks & Spencer pays about €2 million for 10,219sq m (110,000sq ft) and Penneys about the same figure for a store with a floor area of 5,574sq m (60,000sq ft).
The Dundrum centre extends to about 1.34 million sq ft with about 120 shop, 50 restaurants, cinemas, a theatre and 3,400 car park spaces.
Chartered Land is also the owner of the dated 5.5 acres Dundrum Village Centre on the city side of the old town centre where there are 20 retail outlets including Lidl which pays a rent of €400,000 and Dealz (€140,000).
The original planning for the site envisaged a phase 2 development but planning consent has since run out and may not be as easily obtained as in the past.
Nama originally owned €538 million of the €775 million in senior debt secured by Dundrum. The State agency subsequently bought in Ulster Bank’s €129 million in syndicated loans at par value as well as a €108 million syndicated loan from KBC Bank at par.
Grand Canal Square
Mr O’Reilly has already reimbursed Nama for part of his €2 billion loans. These repayments have included €40 million from the second phase sale of the Gaiety shopping and office development on South King Street, the €120 million sale of 2 Grand Canal Square to Irish Life and a further €232 million sale of two adjoining office blocks to the German fund Union Investments.
Chartered Land earns 50 per cent of the €9.75 million rent roll from the Ilac centre and also avails of a 50-50 split of the €14 million in rents from the Swords Centre.
