Hammerson becomes major player with Dundrum deal

UK property group Hammerson has become one of the biggest players in the Irish retail sector after securing ownership of a number of assets that were owned and developed by Chartered Land, a company controlled by Irish developer Joe O'Reilly.

These include the Dundrum Town Centre and a neighbouring six-acre site that is set for a mixed-use development.

Hammerson has acquired these assets in partnership with Allianz Real Estate.

In addition Hammerson is set to take ownership of 50 per cent stakes in both the Ilac and Pavilions shopping centres in Dublin, subject to agreement being reached with other shareholders, probably by the end of this year.

It has also secured ownership of a 16-acre site beside the Pavilions in Swords and a prime five-acre plot called Dublin Central, which is bounded by O’Connell Street and Henry Street.

Chartered Land will be the development manager of the Dublin Central project and also has an option to take a 50 per cent stake in the site by June 1st next year.

The financial details behind this consensual agreement with Mr O’Reilly were not disclosed, but Hammerson confirmed a payment was made to Chartered Land, which is thought to reflect work carried out by the company on what was a complex transaction.

Dublin assets

The portfolio of Dublin assets encompasses 200,000sq m of shopping centre space, housing 320 tenants and achieving an annual footfall of nearly 50 million people. Hammerson’s share of the rent is €45 million. The initial yield on the portfolio will be 4 per cent with a reversionary yield of 4.6 per cent.

The agreement with Mr O’Reilly follows on from the purchase by Hammerson and Allianz of Project Jewel last September from Nama.

Hammerson and Allianz paid €1.85 billion to purchase the loans, with the UK company’s share coming to €1.23 billion.

Speaking to The Irish Times, Hammerson chief executive David Atkins said his company was happy to reach agreement on a deal with Mr O'Reilly.

“We’re really excited now about getting our hands on the assets and moving them forward,” he said.

Rent reviews

Mr O’Reilly said he was “very pleased” that the transaction had “concluded successfully” and was “confident” that Hammerson and Allianz would continue to “invest in and develop” the assets in the coming years.

He said Chartered Land was now focused on the development of the former Clyde Court Hotel in Ballsbridge in partnership with Abu Dhabi’s sovereign wealth fund and the Elm Park Urban Campus in Dublin 4.

Simon Betty, who heads up Hammerson's operation in Ireland, said 16 rent reviews in the Dundrum Town Centre have been completed to date with another 56 to be concluded over the next 12 to 18 months.

The reviews have so far resulted in an average 11 per cent rise in rents, with the latest review recording an 18 per cent increase. Dundrum is 99 per cent let, with passing rent of €60 million. Retail sales there increased by 6 per cent in the year to March 2016.

In terms of the six-acre Dundrum village site, Mr Betty said it would seek a mixed-use development, comprising retail, residential, office and possibly a hotel.

The Dublin Central project is complicated by a legal case connected with buildings and laneways on Moore Street that are connected with the 1916 rising.

Mr Atkins said the judgment was under appeal and added the company would be “working on that going forward”.