Stephen’s Green Shopping Centre majority stake guiding €130m

Two separate shareholdings amounting to a 62.4 per cent stake in Dublin’s St Stephen’s Green Shopping Centre are being quietly offered for sale in a targeted process at a guide price of €130 million.

The shares in question are held by New York-headquartered Madison International Realty and businessman Pierce Molony, and comprise individual holdings of 35.4 per cent and 27 per cent respectively.

The remaining 37.6 per cent stake in the landmark retail scheme is owned by Irish Life, and is not being made available for sale as part of the process now being handled by HWBC.

While a source familiar with the matter said they would not rule out the possibility of Irish Life seeking to secure full ownership of the shopping centre, it is understood that several other potential buyers have been approached in recent weeks in relation to the property.

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Developed in 1988 by British Land, the shopping centre has more than 90 shops over three levels with an overall floor area of 29,728sq m (320,000sq ft), and is currently producing rental income of about €8 million.

It is understood potential investors have been briefed on the centre’s capacity to accommodate an additional 200,000sq ft of space. The majority of this would be office space and built above the existing retail scheme.

Failed to deliver

While the shopping centre occupies one of the best positions in Dublin city centre at the top of Grafton Street, it has, to date, failed to deliver on its initial promise. Madison International Realty's decision to buy a minority interest in the centre in 2015 had been seen by some industry observers as a potential turning point, given the company's track record as an investor in Grade A real estate.

Madison paid €60 million to acquire its 35.4 per cent stake, in the face of competing bids from four rival funds. The price paid represented a premium of 30 per cent on the €45.6 million guide price set by John Moran of JLL when he offered the shareholding for sale.

Should HWBC manage to secure the €130 million it is guiding for the combined 62.4 per cent shareholding in the St Stephen’s Green centre, Madison would be in line for a payout of around €73.75 million. Such a figure would represent an enviable 22.9 per cent return on the company’s original investment at a time when physical retail is being challenged by the growth of online shopping.