Commercial Property

Hammerson rakes in rent and charges at Dundrum

Cantillon: UK property group’s results bode ill for tenants and consumers

Dundrum Town Centre: Hammerson hiked the parking charges by 50 per cent to €3, much to the disgust of shoppers. Photograph: Matt Kavanagh

Tue Feb 21 2017 - 12:04

There was much to digest from an Irish perspective about Hammerson’s full-year results on Monday.

The listed UK property group told investors that it expects rental levels at Dundrum Town Centre to hit €90 million by 2021, from €65 million at the time of last year's acquisition.

That’s a 38 per cent increase over the period and can surely only mean one thing: higher rents for tenants and increased prices for consumers.

The accounts don't tell how much Joe O'Reilly and Chartered Land received on handing over control of various assets last year

Hammerson owns the Dundrum Town Centre and a neighbouring six-acre development site in the village in a joint venture with German insurer Allianz, with the UK company running the properties and receiving management fees.

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Mixed-use scheme

It has appointed a UK firm of architects to oversee the development of the village site, which it has earmarked as a mixed-use scheme potentially involving retail, offices, a hotel and residential units, that might be sold or leased.

The accounts don’t tell how much Joe O’Reilly and Chartered Land received on handing over control of various assets last year, but Hammerson did earn €17.3 million in interest on his loans, which were acquired from Nama in late 2015.

Hammerson also secured full ownership of the Dublin Central development site off O'Connell Street, a 50 per cent share of the Ilac Centre, which is being given a refurbishment, and a half share in the Pavilions centre in Swords, subject to negotiations with other shareholders.

Risks and uncertainties

Under the heading of risks and uncertainties in its results announcement, Hammerson referenced “changes to Irish real estate tax”. The Irish properties are held in a QIAIF (Qualifying Investor Alternative Investment Fund), which made them tax-exempt until the introduction of a 20 per cent withholding tax by the Government last year.

The Irish tax exemption was worth €2 million to the company in 2016.

Hammerson also signalled that the "threat level of a major incident" at one of its properties – it has assets in the UK, France and Ireland – had increased during 2016. "We have enhanced our physical security measures at our properties and maintain appropriate insurance cover," it added.

Here’s hoping they never have to put them into action.

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