A New York-based hedge fund has placed a major bet on a regional retail recovery in Ireland with the €115m (£83.4m) purchase of a shopping centre portfolio once valued at €450m.
Davidson Kempner Capital Management is under offer to buy the Cornerstone Portfolio from Allied Irish Bank. The portfolio comprises six regional shopping centres with a combined rent roll of €8.8m pa.
The deal is the latest sign of widening confidence in the strength of the Irish recovery.
While investors have shown a huge appetite for prime assets in Dublin, the country’s regional retail markets have yet to attract the same level of interest.
A source said: “The difference between the two prices is massive but not unexpected. Most of these assets are provincial and the provinces just haven’t caught up in the same way Dublin has. Retail rents in the regions have fallen by 40% to 50% and yields have slipped from 5% to 9%.”
The portfolio includes the Gorey shopping centre in Wexford, Tipp Town shopping centre in Tipperary, Westside shopping centre in Galway, Orwell shopping centre in Templeogue, a 50% stake in MacDonagh Junction shopping centre in Kilkenny and Athlone Towncentre with 150 adjacent flats.
It is the second AIB portfolio that Davidson Kempner has bought. In 2013 it bought the £200m Project River portfolio of UK non-performing airport hotel loans.
AIB appointed Grant Thornton as receivers to the Cornerstone Portfolio in 2013; JLL advised on the sale.
