AIB set to take €30m hit on Blanchardstown shopping centre loan

At least three investors are understood to have bid for AIB’s loan tied to the Blanchardstown shopping centre. Photograph: Nick Bradshaw

AIB is set to take a haircut of about 17 per cent on a loan tied to the Blanchardstown shopping centre, after it agreed terms to offload the debt to an investment fund.

The bank will sell the loan, which had a so-called par value of €175 million, to London-based Hayfin Capital Management for about 83 cents in the euro, according to a source familiar with the matter. That implies the loan will be sold at a discount of about €29.75 million.

The deal will see the loan taken over by Hayfin take over the loan, which was part of wider syndicated debt advanced against the centre which is now owned by Goldman Sachs. The US investment bank has already put the Blanchardstown Centre up for sale.

The discount on the loan is one of the most significant losses to be crystallised by a lender in Ireland amid the current slowdown in the commercial property market in general.

Spokesmen for AIB and Hayfin declined to comment.

At least three investors are understood to have bid for AIB’s loan, which is separate to a similar one tied to the Square shopping centre in Tallaght. The owner of that centre, Oaktree Capital, has also put it on the market in recent months, with the sale process understood to be ongoing.

The terms of the sale may have implications for the overall debt load tied to the Blanchardstown Centre. The syndicated debt has a face value of about €575 million. If this discount was extended across the entire debt, it would have a current value of just under €475 million.

The deal is the latest sign of stress in the Irish commercial property sector. While the retail sector has been dealing with the shift to online shopping in recent years, the current problems have been largely in the office market, which has been hit by the growth in working from home since the pandemic and job cuts at some big tenants, especially in the tech sector, as well as the jump in interest rates.

A portfolio of assets tied to developer Johnny Ronan, which includes Bewleys Cafe on Dublin’s Grafton Street, went into receivership this week. Loans from AIB and Bank of Ireland worth about €130 million were at the centre of the decision to call in the receivers.

AIB and Bank of Ireland became concerned about the debt and set deadlines that were not met by Ronan Group Real Estate, The Irish Times reported on Wednesday.

The retail sector has seen a flurry of activity in recent months after being somewhat quiet for a number of years. The sector accounted for about a third of all investment activity between July and September, according to broker Savills, equating to some €146 million. Regional shopping centres accounted for a quarter of all volumes, the firm said in a report published last month. Among the deals concluded, Davy Stockbrokers acquiring two high-yielding shopping centre investments: the nationwide Hexagon Portfolio for €74 million and Marshes Shopping Centre in Dundalk for €29 million.

Peter Flanagan is an Assistant Business Editor at The Irish Times