Goldman Hopes For Retail Rebound As Buyers Sought For €700M Blanchardstown Centre

Returning confidence in a repriced European shopping sector has prompted Goldman Sachs to appoint Eastdil Secured and CBRE to find a buyer for Ireland’s largest shopping centre, the Blanchardstown Centre, according to The Irish Times.

The proposed disposal of the west Dublin scheme is expected to have a guide price of €650M-€725M.

Goldman Sachs originally acquired the mall for about €750M in December 2020 in a deal with the scheme’s previous owner, Blackstone.

The 1.1M SF Blanchardstown Centre has undergone extensive asset management since its latest acquisition, including the opening of flagship Zara and Flannels stores to replace Debenhams and the debut of Nike’s Unite format.

It attracts 16 million people annually and has a catchment of 1.9 million people.

The move comes as the embattled retail sector is beginning to attract investor interest again as the impact of online sales, the pandemic lockdowns and corporate failures appears to have largely worked itself through the system.

That compares with commercial real estate, where global economic uncertainty and the consequences of hybrid working are yet to be fully realised in the office sector.

Based on an improved macro outlook, AEW has predicted annual growth of 1.2% for prime European high street retail rents and 1.4% per annum for prime shopping centre rents over the next five years. This, it said, signifies a stabilisation compared with the declines of -9% in the UK and -4% in Continental Europe recorded during 2020-2022.

AEW highlighted Dublin, along with Stockholm, Paris and the UK regional markets as the standout shopping centre markets, while among high street retail markets Dublin, Berlin and Paris ranked top.

Blackstone Flagship Retail Deal

In 2016 Blackstone paid about €950M to secure ownership of the Blanchardstown Centre from Stephen Vernon’s Green Property, which set a record as the most valuable sale of a single property in the history of the State.

It is believed to have been financed originally with €250M of equity, with the balance a combination of senior debt and mezzanine financing provided by a syndicate of lenders that reportedly included Morgan Stanley, AIG, AIB and Goldman Sachs.

However, it came under pressure in early 2020 amid the pandemic lockdown and by August of 2020, Blackstone was reportedly ready to agree to a consensual surrender of control if a debt deal with the scheme’s lenders could not be agreed, and in November 2020 Goldman Sachs took over the scheme.

The Blanchardstown Centre currently comprises 188 shops, anchored by major retailers such as Dunnes Stores, Penneys, Aldi, Hollister, Mango and Marks & Spencer, two external retail parks, external retail units, eBay's HQ and 5,600 free car-parking spaces.

The scheme was strengthened after the loss of the 9K SF Debenhams was filled respectively by fashion retailer Zara and Flannels, while Nike’s 10K SF debut Unite store in Ireland replaced the sportswear giant’s factory store at the adjacent Westend Retail Park.

European Retail Rebound

AEW said that Europe witnessed a rebound in in-store sales in 2021, with projections indicating stabilisation at pre-pandemic levels by 2027.

Concerns about high interest rates saw pan-European retail investment volumes at just €31B in 2022, half of the record €62B achieved in 2015.

In AEW’s latest base case, the projected returns for prime shopping centres from 2023 to 2027 stand at 6.3% per annum, while prime high street retail returns are expected at 3.6% per annum, a notable improvement on its September 22 forecasts.

“Our research shows that the prime European shopping centre repricing allows for rebound, with our base case scenario forecasting projected returns for prime shopping centres at 7.7% per annum over the next five years, outperforming the all-sector average," AEW Head of Research & Strategy Europe Hans Vrensen said.

“Notably, our forecasts suggest that there will be some capital value recovery. While the higher interest rate environment has undoubtedly slowed investment activity, the prime markets for shopping centres and high street retail are proving increasingly attractive,” he added.