Dundrum Excluded from Hammerson Portfolio Sale - Construction Network Ireland - Construction Network Ireland

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Published in Commercial Property on 24/02/2020

Dundrum Excluded from Hammerson Portfolio Sale

#Hammerson

CNI Editor reports

Dundrum Town Centre has not been included in property developer Hammerson’s £400m (€477m) portfolio sale.

In a statement yesterday, Hammerson, which co-owns Ireland’s largest shopping centre with Allianz Real Estate, described Dundrum Town Centre as one of its “key retail venues”.

The south Co Dublin outlet, which has 120 shops and 45 restaurants, earns rental income of around €30m a year.

Its tenants include fashion chains Zara, Penneys and BT2.

Back in December, Hammerson received planning approval to build a 107-unit apartment building beside the shopping centre – its first foray into residential development in Ireland.

Hammerson will exit out-of-town retail locations in the UK by selling seven of them to private equity group Orion European Real Estate Fund, amid store closures on Britain’s main streets and the rise of online shopping.

Separately, Hammerson has sold Abbey Retail Park in Belfast and Parc Tawe in Swansea, Wales individually, generating proceeds totalling £55m.

The total price of the portfolio transaction – and two separate sales – represents a net initial yield of 8.9pc and is 22.8pc below the last reported book value as at June 30 last year.

Commenting on the transactions, Colm Lauder, analyst at Goodbody Stockbrokers, said: “The discount on the retail park disposal is wider than we had expected when we published our deep-dive retail parks note in June 2019, when we had forecast a net disposal value of £490m, but this is understandable given the deterioration in market conditions over the last eight months.”

Hammerson has been trimming debt and fixing its balance sheet by divesting some of its portfolio to focus on its flagship sites, premium outlets and city quarters across Europe.

“Against a challenged retail and investment backdrop, we have exited the retail parks sector,” its CEO David Atkins said yesterday.

The company announced plans in 2018 to sell shopping centres that house a number of large retail chains, following its failed takeover of rival Intu Properties.

The business has so far sold 14 retail parks and earned £764m.

Hammerson still holds an interest in a park that is held as a joint venture with Aberdeen Standard Investments and is marked for sale.

Intu has also been struggling with debt, and recently said it was in talks with its largest shareholder and new investors to raise funds to shore up its balance sheet.

Hammerson will report its full results for 2019 tomorrow.