UK property group Hammerson, which has a half stake in Dundrum Town Centre in Dublin, wrote down the value of its flagship Irish shopping centre interests by a further 7.7 per cent in the first half of this year amid uncertainty in the sector.
The value of the Irish portfolio, which also includes 50 per cent stakes in the Ilac Centre in Dublin city centre and Pavilions shopping complex in Swords, north Co Dublin, declined by £49 million (€58.3 million) over the period, Hammerson said on Thursday as it reported interim results. Following an additional foreign exchange rate hit, the combined value of its stakes in the three centres fell to £568 million.
All told, Hammerson has reduced the value of its Irish flagship malls since the start of 2020 by £320 million.
Still, Hammerson said that it and German insurance giant Allianz are at an “advanced stage of refinancing” €600 million of loans secured against the Dundrum mall and that they expect to sign a new facility in early August. The loans fall due in September. Allianz’s holding is held through its Pimco investment unit.
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The Irish valuation charges in the first half came as values in Hammerson’s other flagship shopping centres in the UK and France held their own.
“In Ireland, sentiment has weakened with a number of aborted or stalled transactions being cited as the basis for valuers marking market [rental] yields higher in 2024,” Hammerson said. Rental yields move inversely to property values.
However, there have been signs of life on the deal-making front in the prime shopping centres sector since the end of June.
Receivers appointed by AIB to The Square in Tallaght in May recently picked Eagle Street Partners, the property asset manager founded by two former senior Glenveagh Properties executives, as preferred bidder for the retail complex after it bid €126 million. That’s half the value that was put on it in 2019 when it last changed hands.
Meanwhile, the Blanchardstown Centre’s owner, Goldman Sachs, has fielded bids of up to €600 million for that mall. It took control of the centre in 2020 in a deal valued at €750 million in a debt-for-equity swap arrangement with its previous owner, investment firm Blackstone.
Hammerson said the vacancy rate across its Irish centres stood at 4.3 per cent in June, up from 3.8 per cent six months earlier. However, footfall increased 1 per cent.
The group also reduced the value of assets in its so-called developments and other portfolio across the UK and the Republic by 4 per cent to £270 million. This portfolio includes a 50 per cent interest in residential schemes in Dundrum, a mixed-use scheme planned for its landmark O’Connell Street site, and land in Swords.
Hammerson said it is continuing works on a 122-unit build-to-rent development in Dundrum, known as the Ironworks, “where the concrete frame will be completed shortly, albeit with a short delay having recently replaced the main contractor”, it said. It expects the development to be completed in the autumn of next year.
Elsewhere in the portfolio, it continues to await the decisions of An Bord Pleanála on plans to build hundreds of apartments on the site of the old shopping centre in Dundrum with Allianz, as well as its proposed Dublin Central hotel-to-retail redevelopment on O’Connell Street.
Hammerson said on Monday it has agreed to sell its fashion outlets business, including a large stake in Kildare Village in the Republic, to a private equity firm backed by luxury goods group LVMH for £600 million.
L Catteron, which is also backed by the family office of LVMH chief executive Bernard Arnault, is buying the Hammerson Select Retail unit, which owns stakes in 12 centres across Europe, through a vehicle called Silver Bidco Ltd.
This includes 41 per cent in the Kildare Village designer outlet, which opened in 2007 and is home to more than 120 boutiques, including Armani, Michael Kors, and Mulberry. The portfolio also includes La Roca Village in Barcelona, La Vallée Village in Paris and Bicester Village in England.
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