The owners of the Dundrum Town Centre are close to refinancing €600 million of loans secured against the landmark Dublin mall with a group of lenders led by Rothesay, the UK pensions specialist, according to market sources.
It is understood this would mark the first retail property loan in which Rothesay, which had £61 billion (€72.2 billion) of assets under management at the end of last year, has been involved.
UK property group Hammerson, which shares ownership of the 140,000sq m (1.5 million square feet) centre with Pimco, an investment unit of German insurance giant Allianz, said last week that it is at an “advanced stage of refinancing” the loans and expects to sign a new facility in early August. The loans fall due in September.
Rothesay, founded by Wall Street giant Goldman Sachs in 2007, is a big UK buyer of pension liabilities from defined-benefit schemes, where retirement payments are linked to beneficiaries’ final salaries. Goldman Sachs sold its one-third stake in the business a decade later. It is now owned by US insurance giant MassMutual and Singaporean sovereign wealth fund GIC.
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About 28 per cent of Rothesay’s investments were in secured loans and mortgages at the end of last year, according to its latest annual report. Its commercial property lending exposure is mainly through senior debt financing of “landmark property assets with highly rated tenants and owners, and low loan-to-value ratios”, it said.
A spokesman for Rothesay declined to comment, while a spokesman for Hammerson, which manages the Dundrum centre on behalf of the joint venture, did not respond to a request for comment.
The 50/50 joint venture partners acquired loans attached to the shopping mall in 2015 as part of a purchase of a portfolio of National Asset Management Agency debt linked to developer Joe O’Reilly’s Chartered Land. Hammerson and Allianz secured ownership of the Dundrum centre a year later under a consensual arrangement with Mr O’Reilly. They refinanced the asset in 2017 with €600 million of low-cost, seven-year loans, said at the time to to carry an interest rate of under 2 per cent after the borrowers swapped a floating rate for fixed one.
It is not yet known what interest rate the new loans will carry, but it will be a multiple of the one agreed seven years ago.
Hammerson said last week that it wrote down the value of its flagship Irish shopping centre interests – which also includes 50 per cent stakes in the Ilac Centre in Dublin city centre and Pavilions shopping complex in Swords, north county Dublin – by 7.7 per cent in the first half of this year amid uncertainty in the sector.
All told, Hammerson has reduced the value of the Irish malls by £320 million since the start of 2020 as the pandemic accelerated online shopping, and a spike in interest rates globally in recent years hit the wider commercial property sector. That left the combined value of its stakes in the three assets at £568 million at the end of June.
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.
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 the retail centre 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.
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