NAMA has selected a five-strong shortlist for its €2.4bn Project Jewel loan portfolio, as the battle for the 1.3m sq ft Dundrum Town Centre narrows to five.
Bloomberg also reported the same shortlist this afternoon, additionally citing Kuwait Investment Authority as Hines’ joint venture partner.
CoStar News reported on Project Jewel on Monday after the indicative first round bids were lodged. The standout missing finalist is Abu Dhabi Investment Authority (ADIA), in the sovereign wealth fund’s first major bid to acquire commercial real estate in Ireland. JP Morgan also failed to progress beyond first round.
NAMA, advised by Eastdil Secured, has attempted to strike a balance in selecting five finalists to guard against bidder coalescence and protecting the boundaries of price competition.
A number of anticipated bids were thought to have not materialised in the first round, particularly by Blackstone and Simon Property Group. Norges, Starwood’s REIT and Unibail-Rodamco are also believed to have not bid.
Project Jewel is comprised of loans extended to Joe O’Reilly’s Chartered Land which includes:
- the 1.3m sq ft Dundrum Town Centre, Ireland’s largest shopping centre, which has a value of around €1.1bn, which would equate to a net initial yield of circa 4.75%;
- a 50% stake in the Pavilions shopping centre in Swords, Irish Life and I-PUT each own a 25% stake;
- a 50% stake in the Ilac shopping centre in Dublin city centre, Irish Life owns the remaining 50% stake;
- a land site near Ilac shopping centre in central Dublin, which prior to the crash was earmarked for a large scale retail scheme anchored by John Lewis;
- a land site adjacent to Dundrum, which previously was slated as Dundrum shopping centre Phase II. The existing planning permission may need to be re-secured if the eventual winner sees value in a residential component to any future scheme.
Chartered Land only owns 40% of Dundrum Town Centre, but NAMA innovatively acquired the debt in shopping centre that it did not already own last year through buying Ulster Bank’s €129m syndicated loan from Project Button and a €108m syndicated loan from KBC Bank Ireland at par last April.
The marriage value in uniting the debt is expected to deliver a considerably improved return for NAMA.
The sale price for the €2.4bn Project Jewel loan portfolio is expected to reach between €1.6bn and €1.7bn, with Dundrum reflecting up to two-thirds of the loan portfolio’s real estate value.
The major investment banks, including BAML and Morgan Stanley, are believed to be keenly interested in lending against Dundrum Town Centre, which has implications for the equity cheque the winning bidder would have to provide.
Assuming an effective purchase price for Dundrum of €1.1bn, a 65% loan-to-cost (LTC) senior loan by an investment bank would equate to an equity cheque of €385m, which converts back to a sterling cheque of just below £275m.
Some in the market believe the asset – given the upside potential through the adjacent land site – would even command an additional mezzanine loan, shrinking the equity cheque further.
All parties declined to comment.