Dundrum Town Centre is arguably the jewel in the crown of Irish retail, and is inevitably the subject of much focus as other shopping centres are sold at relative knock-down prices. So it is worth noting that its owners, UK firm Hammerson and Pimco Real Estate, have refinanced a €570 million loan secured against the centre.
The two firms, which together control the centre through a joint venture, arranged a €350 million non-recourse term loan of up to seven years with lenders Rothesay, BNP Paribas and Deka. Hammerson accounts for about €175 million of that loan, the company said on Wednesday. The two firms are funding the remaining €220 million from existing cash held in the joint venture and newly issued equity, it added. While the loan was worth €600 million, there was €30 million cash held against the loan, reducing the refinancing needed to €570 million.
The new term loan is repayable on or before maturity in September 2031 at an all-in interest cost expected to be around 5.5 per cent. Given that the refinancing replaces the loan due to expire next month, the move extends the average maturity on Hammerson’s debts to 2.9 years from 2.2 previously.
[ Dundrum centre owners near €600m refinancing with group led by UK’s RothesayOpens in new window ]
Getting the refinancing away is a boon to Hammerson – its shares rose 1.2 per cent on Wednesday – but will also be welcomed by the retail industry here. Hammerson cut the carrying value of its shopping centre interests here by 7.7 per cent in June. All told, it has reduced the value of its Irish interests, which include 50 per cent stakes in the Pavilions in Swords and the Irish Life Mall by about £320 million since 2020.
Given the amount of commentary around the apparent decline of bricks-and-mortar retail as shopping moves more online, this should be a vote of confidence in the market here. Still, Dundrum is a one of a kind in Ireland. Unlike other malls, it is really a so-called super-prime shopping centre and classed with maybe a dozen such assets in western Europe.
Dundrum Town Centre is clearly doing fine. But does that mean the rest of physical retail is fine too? Cantillon is sceptical.
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