Developer to pay €125m for half share in Ilac centre

If developer Joe O'Reilly buys a 50 per cent stake in the Ilac centre, he will push to link the Ilac with the proposed Millennium Mall project on the Carlton site, writes Jack Fagan

Ownership of Dublin's Ilac shopping centre on Henry Street and Moore Street is about to change.

The property developer Joe O'Reilly, the prime mover behind the opening of the Dundrum Town Centre, has agreed to pay €125 million for British Land's 50 per cent stake in the Ilac which is currently being remodelled and enlarged.

The other 50 per cent stakeholder, Irish Life, has first option to purchase British Land's holding at the same price but it is not expected to do so. However, the sale to Mr O'Reilly cannot proceed until Irish Life makes its intentions known within about two weeks.

If, as seems likely, that Mr O'Reilly gains a foothold in the Ilac, he will undoubtedly push to link up the centre with O'Connell Street through the development of the long delayed Millennium Mall. Dublin City Council has agreed to sell him the Carlton site if the courts uphold its move to compulsory acquire the property.

In the meantime, Mr O'Reilly will be settling for an equivalent yield of 4 per cent on his investment in the Ilac if Irish Life does not exercise its purchase option. He will also have to contribute up to half of the €40 million due to be spent on the first major revamp of the centre since it opened in 1981.

Property experts are confident that Irish Life will not want full ownership of the centre again after striving for years to reduce its exposure in what was then its largest property investment. After running into a series of problems with a plan to redevelop the centre, Irish Life swapped a 50 per cent stake with British Land for a 73 per cent equity holding in the St Stephen's Green Shopping Centre. It also paid more than €89 million in cash to complete the deal.

Two years ago Irish Life passed up an opportunity to buy the remaining 27 per cent stake in the St Stephen's Green Shopping Centre from British Land. This left the way open for Bus Stop newsagent and property investor Pierce Moloney who acquired it for €64 million.

Once it became asset managers for the Ilac, British Land abandoned the grandiose redevelopment plan proposed by Irish Life, replacing it with one that promised to be "cost-effective and deliverable".

Only a small proportion of the €40 million has already been spent on the work which will include new street frontages, double height malls and shop fronts, and a major upgrade of customer facilities.

The other major change will see the present Dunnes Stores on Henry Street redeveloped and linked across Sampsons Lane directly into the centre, where it will become another anchor. The move is expected to provide a major boost for the centre and increase the footfall along the poorly performing Moore Mall.

Dunnes' new four-storey retail building on Henry Street will be extended into the Ilac and will have a gross area of about 7,432sq m (80,000sq ft). The Irish multiple will continue to operate its store on Central Mall but will vacate its unit on the Moore Mall, leaving the way open for the shopping centre to create four new large units of about 470sq m (5,059sq ft) for incoming traders.

The most notable changes planned include the double height shop fronts, curved vaulted ceilings and a partially glazed roof to lift the height of the centre.

The rundown central square is also to be transformed into a bright, airy, modern facility. There are plans to upgrade the restaurant facilities. It is also planned to provide "landmark entrances" including a three-storey atrium at the Moore Street entrance.

The departure of Easons from the Henry Street frontage has opened the way for the redevelopment of that unit for ladies' fashion retailer H&M.

Mr O'Reilly heads up Castlethorn Developments, the company responsible for the Dundrum Town Centre, by far the largest shopping complex in the country with a value of over €1 billion. Another phase of Dundrum Town Centre is due to open this autumn and the same group is then to proceed with the redevelopment of the old shopping centre on the opposite side of the village.

Separately, Mr O'Reilly has secured planning permission to replace the former Eircom office block on South King Street with a €100 million retail complex.

Castlethorn is one of the largest homebuilders in the Dublin area and has a substantial landbank which will take many years to develop.