ShoppingCentreInvestments:The winning bidder among the property developers seeking a chunk of The Square shopping centre will be decided next week, writes Jack Fagan.
Three property developers are in contention to buy the main investment portfolio in The Square in Tallaght, Co Dublin, as well as an 11 per cent stake in the planned expansion of the complex. The vendor, Quinlan Private, and its advisers, CB Richard Ellis, is expected to choose a preferred bidder in the next week and then open direct negotiations on the sale.
Predictably, Noel Smyth's Alburn company has put in a strong indicative offer but so too has his rival Liam Carroll of Danninger. The third contender is Treasury Holdings, a company guided by John Ronan and Richard Barrett but newly reinvigorated since the well experienced John Bruder took over at the helm.
A fourth bid was apparently lodged by one of the private equity firms, possibly with the support of existing investors in The Square such as Larry O'Mahoney and Tom McFeely.
However, the indications yesterday were that a purchaser is likely to be chosen from one of the three highly experienced development companies.
With the investment market showing signs of softening following a succession of interest rate increases and with another rise in the pipeline for September, the indications are that Quinlan Private may not achieve the strong guide price of €350 million forecast when the portfolio was offered for sale a month ago.
However, the selling price is unlikely to be significantly below that figure given that there are three property developers chasing it, just as preparations are getting under way to embark on a major extension later this year.
The shopping centre stands on seven acres and with a further 20 acres available there is potential to treble it in size with a mixed use scheme to serve the third largest population after Dublin city centre and Cork.
The Quinlan Private investment portfolio covers 68 shops occupied by many of the top traders in the centre.
The rent roll of €10 million equates to about 51 per cent of the entire rental income from the shopping centre. CB Richard Ellis has put a market rental value of €11.8 million on the shops but its €350 million guide price may have been on the strong side for such a large portfolio.
That price would have produced a net yield of only 3 per cent but it does not take into account the development potential on the site.
Irrespective of who walks away with the main portfolio, the odds are that the successful purchaser will offer to buy in the remaining investments in order to bring The Square into single ownership.
With the original tax breaks already exhausted, some of the other major stake holders, including AIB Investment Managers and Alanis (the company owned by the McCormack family), may well be prepared to cash in their chips.
Mr Smyth is in a strong position going into the next extension of The Square. His company, Alburn, will have a 45 per cent shareholding in the planned extension.
Next in line will be South Dublin County Council - owners of the land - with 35 per cent of the equity; Quinlan Private with 11 per cent and other owners with 9 per cent.
Planning permission has been granted for a development of 75,000sq m (807,293sq ft) which will include 23,232sq m (250,000sq ft) of retail space, 4,108sq m (44,218sq ft) of offices; 3,690sq m (39,720sq ft)of leisure facilities, 373 apartments, 1,617sq m (17,405sq ft) of multi-storey car parking and 15,755sq m (169,585sq ft) of ancillary space.
