US private equity giant weighs in with bid of up to €600m for Blanchardstown Centre

US-headquartered private equity giant Strategic Value Partners (SVP) has become the latest party to enter the competition for the Blanchardstown Centre.

With no clear outcome to the sale process in sight four months on from the receipt of first-round bids, The Irish Times understands that SVP has tabled an offer of between €550 million and €600 million for the largest shopping centre in the State. It remains to be seen if SPV’s offer is accepted, and if a deal proceeds at either of those levels.

It is understood that the company, which has its headquarters in the wealthy enclave of Greenwich, Connecticut, have already held meetings in New York with Goldman Sachs and Morgan Stanley, the shopping centre’s respective owners and main lenders, and that they now intend to send representatives to Dublin to pursue the purchase of the west Dublin scheme.

According to its website, Strategic Value Partners is a “global investment firm focused on opportunistic credit and private equity opportunities in North America and Europe”. The company has some $18 billion (€16.5 billion) in assets under management.

The news of SPV’s bid to acquire the Blanchardstown Centre comes just over three months after another US-based firm, Northwood Investors, was reported to have made an “aggressive” bid of about €580 million to buy the scheme.

While that figure was substantially more than the offers made by other parties which ranged between €500 million and €550 million, The Irish Times understands that Northwood’s offer wasn’t sufficient to secure preferred bidder status.

The other parties vying for ownership of the shopping centre in the first round of bidding were businessman Eamon Waters’ investment and property development company Sretaw PE, developer Pat Crean’s Marlet Property Group, UBS, Hines, and a subsidiary of Starwood Capital.

Goldman Sachs purchased the Blanchardstown Centre from the US private equity giant Blackstone for €750 million in December 2020.

Blackstone had paid about €950 million in 2016 to secure ownership of the complex from Stephen Vernon’s Green Property but came under pressure in early 2020 with the arrival of the Covid-19 pandemic.

By August of that year, the US-headquartered real estate investor was reportedly prepared to agree to a consensual surrender of control of the centre if a debt deal with its lenders on the scheme could not be agreed.

Blackstone’s near €1 billion purchase of the Blanchardstown Centre, which set a record as the most valuable sale of a single property in the history of the State, is believed to have been financed originally with €250 million of equity, with the balance being a combination of traditional senior debt and mezzanine financing provided by a syndicate of lenders that reportedly included Morgan Stanley, AIG, AIB and Goldman Sachs.

AIB recently opted to take a haircut of about 22 per cent on the €175 million it had lent, when it agreed to sell the debt to London-based Hayfin Capital Management for about 78 cent in the euro, indicating that the loan was sold at a discount of about 22 per cent, or €38.5 million. Morgan Stanley, which remains the senior lender on the shopping centre, is understood to be owed about €580 million.

Even if a sale of the scheme were to proceed with a discount similar to that applied to the AIB loan sale, Morgan Stanley would barely be repaid while Goldman Sachs would see its investment being wiped out.

Separately, The Irish Times understands that Eagle Street Partners recent selection as preferred bidder for The Square shopping centre in Tallaght came on foot of an offer of €126 million for the scheme.

Hines, which had been in exclusive talks to buy the scheme for about €125 million before its senior lender, AIB, opted in May to appoint Kieran Wallace and Eamonn Richardson of Interpath Advisory as joint receivers, is believed to have tabled a far lower offer on this occasion.

The Square’s move into receivership was made with the consent and co-operation of the centre’s US-headquartered owner, Oaktree. Oaktree paid the National Asset Management Agency (Nama) €250 million in 2019 for 90 per cent of the centre, which has 130 retail units and a 13-screen cinema distributed across 53,000sq m (570,486 sq ft) of space, along with planning permission to extend and a site potentially suitable for housing. AIB backed the Oaktree deal.