A dozen first round bids were submitted last night for NAMA’s Acorn portfolio, comprised of three provincial Irish shopping centres, while final bids are due tonight for the bad bank’s Redwood portfolio, amid a frenzy of activity in Ireland over the summer and beyond.
CoStar News understands that the Acorn portfolio has drawn as many as 12 first round bids, including a joint bid by Patron Capital and O’Callaghan Properties, Kennedy Wilson Europe, IPUT and Orion Capital Managers.
At least three bidders are expected to move to the second round, with market sources indicating that the bid cut-off for progression to the next phase was above the Acorn portfolio’s initial €130m guide price, in the latest indicator of a weight of capital bidding up pricing.
Patron Capital and O’Callaghan Properties, who are joint venture partners on Project Drive which includes the Northside Shopping Centre in Dublin, are understood to be among those which have progressed to the second round.
The Acorn portfolio is comprised of three provincial Irish shopping centres, delivering €13.18m of rent from 120 tenants. The assets are:
- the Blackpool Shopping Centre and Blackpool Retail Park in Cork;
- the Millfield Shopping Centre in Balbriggan, Dublin; and
- the Showgrounds Shopping Centre in Clonmel, County Tipperary.
The Irish shopping centre market has been dormant for six years, with the only post-crisis sale the 72.8% stake in Liffey Valley sold by Aviva Investors to HSBC Alternative Investments Limited (HAIL) and Hines for €252m. However, Liffey Valley is a stabilised Dublin shopping centre, compared to the Acorn assets’ more provincial locations.
The significance of the eventual Acorn trade, therefore, should not be underestimated with the market still very much in the “price discovery” phrase. Whichever investor or investors emerge as the winner, this process will reveal important yield comparables offering an insight as to how investors price risk on this kind of stock.
Jones Lang LaSalle and Bannon are selling the Acorn portfolio on NAMA’s behalf.
NAMA’s Redwood portfolio
Final bids are due this evening for NAMA’s Redwood portfolio, with the battle lines for the four Dublin properties split by Redwood’s two offices and two retail-focused assets.
The guide price of €160m is expected to be beaten, with the portfolio possibly carved up among two separate winners.
The portfolio’s two prime offices are: No. 2 Grand Canal Square, the flagship prime office within Redwood, and the Observatory on Sir John Rogerson’s Quay.
No. 2 Grand Canal Square, which is fully let to William Fry and Capita for a combined €4.44m annual rent, is the most fiercely-competed asset and provides 56% of Redwood’s overall income. Fully stabilised, No. 2 Grand Canal Square’s expected sale price is expected to reach €100m – more than 16% above the initial €86m guide price.
CoStar News understands final bids are expected this evening from three major Irish investors, Irish Life, Hibernia REIT and IPUT, and two German funds, Union and Patrizia.
The fate of the two retail-focused Redwood assets is a little more complex.
The ownership of One Clarendon Row, a broadly 50:50 retail and office block, is split by NAMA owning 100% of the interest in the asset’s office component and 10% interest in the retail component. This ownership split is the result of the previous owner-developer selling a 90% stake to AIAC, now IBRC Assurance Company.
At the time, AIAC wanted the developer to remain as asset manager and retain a 10% stake in the retail component. AIAC’s 90% retail stake acquisition in One Clarendon Row was funded with an Anglo Irish loan which Lone Star has subsequently acquired as part of its partial acquisition of Project Stone from KPMG, as special liquidators of IBRC.
The legacy IBRC loan acquired by Lone Star remains performing put has passed maturity. Lone Star, therefore, does not directly own the 90% stake but has an indirect claim over it as creditor.
For Lone Star, the marriage value from uniting its debt with the remaining interest in One Clarendon Row would be significant. This would be enhanced further through the acquisition of Redwood’s final asset, Chatham Court, which is immediately adjacent.
If Lone Star is successful in uniting its interest in One Clarendon Row, together with the rest it does not already own, and the adjacent Chatham Court, the private equity fund could either seek to flip on the two blocks at a premium or develop out Chatham Court to a high-end specification and realise even greater upside.
However, Lone Star is not alone in the fight for the two Redwood properties with bids also expected tonight from Irish Life and IPUT.
Knight Frank is selling Redwood on behalf of NAMA.
Bids due next week for NAMA’s delayed €427m Project Spring
First round bids for NAMA’s €427m Project Spring have been called for next Tuesday. The expected eventual trade price is circa €100m, CoStar News understands.
Project Spring, comprised of loans extended to Irish property developer Gerry Conlan by banks including Allied Irish Bank, includes four commercial properties and two land sites. Project Spring’s annual rent is circa €8m.
CoStar News understands that Project Spring includes:
- an office block in Wilton Terrace, Dublin 2;
- the former office of Hibernian Group in Haddington Rd, Dublin;
- Newhall Retail Park in Naas, Co. Kildare;
- Central Hotel, 1-5 Exchequer St, Dublin 2;
- An office building in London;
- land site in Gigginstown;
- land site near the European Club in Brittas Bay, Co. Wicklow.
With so many deals on the market currently, the due diligence required on Project Spring’s land sites has proved onerous, some bidders expecting to scrutinise the two assets much further should they progress to the second round.
NAMA’s €100m Project Parks and BoI’s €120m Capital Collection due out next month
NAMA is expected to bring the Project Parks portfolio to market by the middle of next month, a portfolio of five retail warehouses in provincial Irish towns, CoStar News understands.
Project Parks is comprised of:
- Phase One of The Park, in Carrickmines, formerly owned by deceased Irish developer Liam Maye.
- M1 Retail Park in Drogheda, County Louth
- Lakepoint retail park in Mullingar, a mixed retail, office, industrial and distribution, development
- Four Lakes Retail Park, Dublin Road, Carlow Town, Co. Carlow
- Poppyfields Retail Park in Clonmel, County Tipperary
The guide price for Project Parks is expected to be around €100m, with more than 50% of the portfolio’s value in The Park, in Carrickmines. Project Parks’ annual rent is circa €9m.
NAMA has mandated CBRE and DTZ to sell Project Parks.
Also next month, Bank of Ireland is expected to market the Capital Collection, an eight-strong portfolio of Irish retail and office properties with a guide price of around €120m.
CoStar News understands that the Capital Collection includes:
- Part of Beacon South Quarter, developed by David Ager, once owned by Quinlan Private;
- Nutgrove Shopping Centre, Rathfarnham, Dublin;
- 20 ON HATCH, on Hatch Street Lower, midway between Leeson Street and Earlsfort Terrace and let to Ernst & Young, Deloitte & Touche, Hibernian Group, Barclays Bank and Arthur Cox;
- A one-third interest in Kilmore House, located on the North Bank of the River Liffy in Dublin City Centre.
In addition there are several retail units on Henry Street and Mary Street, while Manor Mills Shopping Centre, Maynooth, County Kildare has been pulled from the Capital Collection.
CBRE and Savills have been mandated to sell the Capital Collection.
Lender consortium to bring c.€200m Project Cherry to market in third quarter
NAMA, Danske Bank and Lloyds are deliberating their options over the disposal of the defaulted club loan, secured by the partially-developed 400-acre Cherrywood scheme eight miles south of Dublin City Centre, with an expected sale price in the region of €200m mooted.
Cherrywood, located in south County Dublin, includes a developed business park partly let to tenants including Dell, Friends First, Covidien, Elavon, Doc Morris, Hibernia Evros.
However, there is still more than 275,000 sq ft of space unlet, according to Cherrywood’s website.
The Cherrywood creditors are deliberating over whether to appoint receivers and enforce over the loans to sell the business park and land – in part or in whole – directly. Or alternatively, begin a sales process for the loans themselves.
This is likely to attract a raft of domestic Irish investors, keen on the development angle, as well as international private equity funds in an opportunity reminiscent of Dublin’s Central Park.
Cherrywood’s land is one of only two in Ireland which have been designated as a Strategic Development Zone (SDZ) which ensures that if future planning permission is submitted in line with the parameters of the already-published masterplan that approval is assured without third party appeal rights.
Project Cherry could take until September before it is launched, when it eventually is, competition is expected to be strong.
Savills has been advising NAMA on Project Cherry.
Lloyds’ readying Project Thomond and a successor to Project Pheonix
Lloyds Banking Group is expected to bring to market a nationwide direct portfolio of shopping centres and retail parks, dubbed Project Thomond, in September.
Project Thomond, so-named after Thomond Park which is the location of Limerick Rugby Park. There is understood to be at least two assets in Limerick as well as shopping centres and retail parks in Dublin, Cork, Sligo and Cavan.
Based on the current understanding of Project Thomond’s assets, an asking price of circa €120m is thought probable.
Savills and Bannon are understood to be appointed to sell Project Thomond on Lloyds’ behalf.
Also coming from Lloyds in the third quarter is “Project Pheonix II”, in reference to the non-performing loan portfolio Lloyds sold to Apollo last December, comprised of granular residential properties throughout secondary locations in Ireland.
Within the Irish residential market, NAMA’s Orange Collection is also up for grabs, comprised of four multi-family apartment blocks in Dublin with 761 apartments with a guide price of €160m.
Listed Irish multi-family investors, CAPREIT and Kennedy Wilson Europe, are understood to be the frontrunners on the Orange Collection.
Finally, Ulster Bank’s successor loan portfolio to Project Button, which is believed to be codenamed Project Mansell, is due to come to market soon, with talk that the unpaid balance could be €1bn plus.
All parties declined to comment.