The country’s most successful shopping centre will be put up for sale with a price tag of up to €1bn, sources say, with bids expected from Asian sovereign wealth funds.
Bad bank Nama will initiate the sale of Dundrum Town Centre as early as next month, the people said, after it gained full control of the retail hub in April. Nama inherited vast debts attached to it from AIB and Anglo, who loaned hundreds of millions to developer Joe O’Reilly.
The 150,000 square foot property will probably sell for around €1bn, property experts predict. A previous valuation of the landmark mall had pegged its worth at closer to €700m prior to a receovery in the market.
The shopping centre’s tenants generate a retail income of €50m a year, meaning its new owners can expect a return of around 5pc a year. Opened in 2005, it has an annual footfall of 19m.
“There is a huge amount of appetite for retail assets right now,” said Marie Hunt, head of research at CBRE Ireland. “Particularly since so few of these assets have been put up for sale since 2007.”
Just two major retail developments have been sold since the start of the financial crisis. These are Liffey Valley Shopping Centre in west Dublin, which HSBC and international property fund Hines bought a majority stake in earlier this year for €235m, and the Acorn portfolio – consisting of shopping centres in Blackpool, Balbriggan and Clonmel – which was bought for €170m by Minneapolis-based Varde Partners.
Several sources said Dundrum will attract a new type of investor to Ireland. “Asian sovereign wealth funds are a real possibility. It will attract a new kind of high-quality buyer, one who maybe hasn’t looked at Ireland previously,” said one. It is understood that Korean investors had been underbidders in the Liffey Valley Shopping centre. Gulf sovereign wealth funds and major pension fund investors are also thought to have run the rule over the centre in the last two years.
“It is a very desirable asset, one of the most successful shopping centres in Europe. It will attract buyers who have billions under management. It is a huge lot size. None of the Irish firms have the scale to do this deal.”
“We could also see a combination of international and Irish investors bid, fronted by a local asset manager. It really is a very exciting asset and a highly anticipated sale.”
Because of its size, Dundrum Town Centre rivals Dublin city centre as a retail hub. Despite the economic downturn it rarely sees a vacant unit and tenants range from luxury retailers such as Harvey Nichols and BT2 to Tesco, HMV and Penneys.
One insider said they would be “highly surprised” if Joe O’Reilly’s Chartered Land does not bid for the asset as part of a combination of investors.
The developer may have lost control of Dundrum but is still highly active in the retail sector. Chartered Land declined to comment. The firm has secured planning permission to develop a major shopping centre in the Moore Street area of Dublin 1. O’Reilly was also behind the development of the Swords Pavilion and ILAC shopping centre in Dublin.
There has been some internal movement at Chartered Land of late. Chief executive Dominic Deeny left earlier this summer for a position with Dunnes. He was replaced by Andrew Gunne, the former managing director of Key Capital Real Estate.
Dundrum won’t be the first retail hub Nama puts up for sale this year. It recently started the sale process for a portfolio of five shopping centres, valued at €100m. This includes Carrickmines retail park, the vast south Dublin site home to Harvey Norman, PC World and Halfords.