Listed UK property group Hammerson published its half-year results on Monday and its joy at having secured ownership and control of a portfolio of Irish assets formerly owned by developer Joe O'Reilly was clearly evident.
A snap of the Dundrum Town Centre, which Hammerson now owns jointly with Allianz Real Estate, appeared on the front of its 63-page presentation to investors, while its plans for Ireland got 42 seconds of the five-and-a-half minute video by chief executive David Atkins, who described them as "trophy assets".
To recap, Hammerson acquired the Project Jewel assets from Nama last September in partnership with Allianz for €1.85 billion.
This included the Dundrum centre, a neighbouring shopping centre site in the village comprising six acres, a half share in both the Ilac and Pavilions centres in Dublin, and a site in the city centre bounded by O’Connell Street and Henry Street.
Hammerson is writing a cheque for just under €1.3 billion to cover its end of the acquisition costs.
The company is particularly enthused by the acquisition of Dundrum, which it will manage on a day-to-day basis. The centre is currently producing rental income of €30 million for Hammerson.
In his video, Atkins said a number of its existing UK tenants had "reached out" to the company about entering the Irish market "with a store in this great centre" while its presentation to investors said there was "strong demand for upsizings" from existing retailers Zara, BT2, H&M, and River Island.
Dundrum has a 99 per cent occupancy rate and delivered like-for-like retail sales growth of 6 per cent in the year to March 31st.
“The centre has estimated reversionary potential of over 15 per cent and therefore offers significant opportunities for rental growth,” Hammerson said in its results release.
In other words, rents could rise by 15 per cent when they come up for renewal. Reviews usually occur on a staggered basis. Some tenants are paying a rent based on a review from a number of years ago that would be lower than the current market rate.
"Rent reviews concluded in the last 12 months with Zara, Oasis, Pull & Bear, Bershka, Karen Millen and Coast provide clear evidence of this reversion," Hammerson said.
It’s no wonder Atkins was “highly enthusiastic” about acquiring the Irish portfolio. They should also provide good diversification against the impact of Brexit on its UK assets.
