The US-based private equity heavyweight, Strategic Value Partners (SVP), has joined the bidding war for the Blanchardstown Centre, Ireland’s largest shopping venue. Despite four months elapsing since the first-round bids and no apparent resolution to the selling process, the latest offer by SVP ranges between €550 million and €600 million. The future of this bid remains uncertain.
The firm, headquartered in Connecticut’s affluent neighbourhood Greenwich, has reportedly engaged in preliminary discussions with Goldman Sachs and Morgan Stanley, who hold ownership and primary lending responsibilities for the shopping centre, in New York. Current plans point towards sending SVP representatives to Dublin to further explore purchasing the west Dublin asset.
Strategic Value Partners, according to its online platform, operates as a global investment entity prioritising opportunistic credit and private equity ventures across North America and Europe and reportedly manages assets totalling around $18 billion (€16.5 billion).
The news about SVP’s Blanchardstown Centre acquisition intentions surfaced just over three months following an aggressive bid of roughly €580 million from another US-based enterprise, Northwood Investors. Despite Northwood’s substantial bid compared to other figures ranging between €500 million and €550 million, the firm was unable to gain the status of the preferred bidder.
Other entities involved in the first-round bidding included Sretaw PE, led by businessman Eamon Waters, Pat Crean’s Marlet Property Group, UBS, Hines, and a Starwood Capital subsidiary.
Goldman Sachs bought the Blanchardstown Centre for €750 million in December 2020 from US private equity colossus Blackstone. Blackstone had initially acquired the complex for approximately €950 million in 2016 from Stephen Vernon’s Green Property. However, they faced difficulties in early 2020 due to the onslaught of the Covid-19 pandemic.
In that year, by the time August rolled around, there were reports suggesting that the property investor based in the U.S. was ready to willingly concede control over the centre if they could not negotiate a debt agreement with its lenders.
The Blanchardstown Centre’s acquisition by Blackstone, estimated to be close to €1 billion, marked the highest single-property sale in the nation’s history. The purchase is thought to have been initially funded with €250 million in equity, while the rest was a mix of customary senior debt and mezzanine loans provided by a team of lenders including Morgan Stanley, AIG, AIB, and Goldman Sachs, reportedly.
It recently became known that AIB chose to accept an approximate 22% loss on the €175 million they had loaned, agreeing to trade the debt to Hayfin Capital Management, a London firm, for about 78 pence per euro. This suggests the loan was sold at roughly a 22% or €38.5 million discount. It is believed that Morgan Stanley, the senior lender for the shopping centre, is owed around €580 million.
Even if the scheme were sold at a discounted rate akin to that of the AIB loan sale, Morgan Stanley would just about break even, while Goldman Sachs’ investment would be entirely erased.
Eagle Street Partners’ recent nomination as the chosen bidder for The Square shopping centre in Tallaght followed a bid of €126 million for the plan.
Exclusive discussions were previously held with Hines to buy the scheme for around €125 million. This was prior to AIB’s decision in May to enlist Kieran Wallace and Eamonn Richardson from Interpath Advisory as joint receivers. It is believed that Hines’ offer this time around was significantly lower.
The transition of The Square into receivership occurred with the agreement and collaboration of its American owner, Oaktree. In 2019, Oaktree paid the National Asset Management Agency (Nama) €250 million for 90% of the centre. The property consists of 130 retail units and a 13-screen cinema spread over 53,000sq m (570,486 sq ft), as well as planning consent for expansion and a potentially suitable location for housing. AIB supported the Oaktree transaction.