Hammerson, a UK-based property conglomerate with a 50% share in Dublin’s Dundrum Town Centre, has reported a further 7.7% reduction in the value of its principal Irish shopping outlets for the first half of this year. This decrease stems from prevailing uncertainties in the retail sector.
In addition to its stake in Dundrum, Hammerson also holds half the property interests in the Ilac Centre located in Dublin’s city centre, and the Pavilions retail complex in Swords, north Co Dublin. The value of its entire Irish portfolio reportedly fell by £49 million (€53.8 million) amid these uncertainties, the company revealed on Thursday as it unveiled its half-year results. Taking into account the effects of foreign exchange rates fluctuations, the total worth of its share in the three centres has now diminished to £568 million.
Amid these developments, Hammerson announced that it and Allianz, a leading German insurer, are nearing the completion of refinancing €600 million worth of loans secured against the Dundrum shopping centre. The loans are due in September. Allianz holds its stake via its investment arm, PIMCO.
The devaluation experienced in the first half coincides with other Hammerson investments in leading shopping outlets in the UK and France maintaining their value. Hammerson observes that uncertainty is higher in the country, as evidenced with halted or cancelled property transactions serving as the basis for property valuers adjusting the forecasted market rental yields higher in 2024. Property values and rental yields share an inverse relationship.
Despite the general trend, there have been noteworthy movements in high-profile shopping centre deals since mid year.
The preferred bidder for The Square Town Centre in Tallaght, currently under receivership by AIB, has been selected as Eagle Street Partners, a property management firm established by former executives of Glenveagh Properties. The bid of €126 million is half of its estimated value in 2019 when it last changed ownership.
On a similar note, the Blanchardstown Centre, owned by Goldman Sachs, has attracted offers amounting to €600 million. Goldman Sachs took over management of the centre in 2020, in a deal valued at €750 million, through a debt-for-equity swap arrangement with prior owners, investment corporation Blackstone.
As of June, Hammerson reported a vacancy rate of 4.3% across its Irish outlets, a marginal increase from 3.8% six months prior. However, there has been a 1% increase in foot traffic.
The asset value in Hammerson’s differentiated projects and other holdings across the UK and Republic have been lowered by 4 percent to £270 million. These assets encompass a 50% stake in domestic plans in Dundrum, a multi-function scheme set for the renowned O’Connell Street site, and terrain in Swords. Hammerson disclosed its progression on a 122-apartment rent development in Dundrum, named the Ironworks. The concrete structure is nearly finished, despite slight delays due to replacing the leading contractor. The project is anticipated to conclude by autumn of next year.
Hammerson is still waiting for the verdict from An Bord Pleanála on constructing multiple flats on the former Dundrum shopping centre site, together with Allianz, as well as a hotel-to-retail regeneration proposal for O’Connell Street in Dublin.
On Monday, Hammerson announced an agreement to divest its upmarket retail outlet division, which comprises a major share in Kildare Village in the Republic, to a private equity company, L Catteron, supported by luxury merchandise group, LVMH. The sale amounts to £600 million. Backed also by Bernard Arnault’s family office, LVMH’s CEO, the group is purchasing the Hammerson Select Retail subdivision via a unit named Silver Bidco Ltd. This comprises a 41% stake in the Kildare Village designer outlet, which hosts over 120 boutiques like Armani, Michael Kors, and Mulberry. La Roca Village in Barcelona, La Vallée Village in Paris and Bicester Village in England are amongst the portfolio as well.