Joint owners Hammerson and Allianz Real Estate have closed a €625 million refinancing of Ireland’s Dundrum Town Centre shopping mall in a deal which locks in a sub-2 percent margin for seven years.
The 50/50 owners of the mall sourced the debt from a club of banks led by BNP Paribas and DekaBank, which are understood to have provided the majority of the loan.
The refinancing comes almost two years after Hammerson and Allianz made moves towards ownership of Dundrum by acquiring the ‘Project Jewel’ loan book from Ireland’s National Asset Management Agency, which contained legacy debt secured by the property.
Remarking on strong demand for the latest financing, Richard Sharp, Hammerson group treasurer, said that the owners have “secured attractive pricing at a historically low coupon”.
The non-recourse facility reflects a conservative loan-to-value of less than 40 percent, given the mall’s valuation at more than €1.5 billion. The loan is expected to be priced at less than 2 percent following the fixing of the underlying reference swap rate.
Hammerson and Allianz emerged as the successful bidders for NAMA’s Project Jewel in September 2015. The loan portfolio comprised debt relating to Irish developer Chartered Land. Aside from Dundrum, the book also contained loans secured by a 50 percent stake in Dublin’s ILAC Shopping Centre, plus a half-stake in the Swords Pavilions Shopping Centre, also in Dublin, and development land including 6.04 acres at the second phase of Dundrum and a 5.36-acre site in central Dublin.
Dundrum was regarded as the ‘jewel’ of the portfolio, with Hammerson and Allianz purchasing the debt as part of a ‘loan-to-own’ strategy. The two firms paid €1.85 billion for the loan book, reflecting a 28 percent discount to the gross liabilities of the €2.57 billion loan portfolio.
In October 2015, Hammerson financed its share of Project Jewel with a short-term, €1 billion revolving credit facility from existing lenders at 81 percent LTV on its €1.23 billion share of the deal. The facility was due to mature in March 2017. BNP Paribas, Lloyds, JPMorgan, HSBC and Deutsche Bank provided the facility ¬– a club which had provided a £415 million revolving credit facility to Hammerson in April 2015.
The joint-venture partners secured ownership of Dundrum in July 2016, following a consensual agreement with the borrower to transfer the underlying properties.
Hammerson’s share of the net proceeds from the latest financing will be used to reduce its borrowings under its revolving credit facilities and the group LTV will be unchanged. The bulk of Hammerson’s financing is unsecured.
“We continue to actively focus on reducing our cost of debt, benefiting from a wide range of funding sources, mostly unsecured but also secured debt in selective circumstances with our joint-venture partners,” commented Sharp.
The 123,800-square-metre mall is located in Dublin’s southern suburbs and contains more than 120 shops, 38 restaurants and a 12-screen cinema. It is 99 percent occupied and generates a total passing rent of around €66 million per year.