What do the Westend Retail Park in Blanchardstown and new Dublin buildings totalling 700 buy-to-lets and 1,000 student rooms have in common? The answer is to be found in Frankfurt, where German investment firm DWS has recently ramped up a €700 million Irish buying spree and become the latest landlord to sue Irish retail tenants hit by Covid-19 restrictions.

DWS is an 80 per cent subsidiary of German financial giant Deutsche Bank with €759 billion in assets under management and over 3,000 employees worldwide. In the past year alone, its property funds have struck deals worth in excess of half a billion euro in Dublin, focusing on residential property.

In December 2019, Grundbesitz Europa, a €10 billion EU-focused fund, paid €168.1 million for the Tolka and Liffey student accommodation buildings in the Point Village, containing a combined 966 beds over 35,770 square metres. The property is managed by UK-based Host Student Housing.

Five months later, another €772 million DWS fund called Grundbesitz Fokus Deutschland changed its investment strategy, until then restricted to German property. In April, it made its first overseas deal, purchasing a development of 58 buy-to-let terraced houses at completion from the Cosgrave Property Group at Cedarview in Santry for €30.5 million.

“The fund’s managers continue to assess the development of the housing market in Ireland positively, in particular due to the stable demand for apartments and the existing excess demand.”

DWS

In July, yet another €4 billion DWS fund, Grundbesitz Global, struck a deal for the Prestige portfolio developed by the McKeon family’s MKN Property Group. DWS agreed to pay a provisional price of €155.6 million for four properties totalling around 300 residential units. This includes €32.9 million for the Cedar Place 86-apartment complex in Swords, delivered in October and “almost fully let”. 

The rest of this agreement covers three properties due to be completed in the coming year: 

• Strand View, a combined development of 52 apartments and 16 houses overlooking Dublin Bay in Raheny;
• The conversion of the Verville Victorian mansion into nine luxury apartments and construction of a block with 59 new ones in Clontarf; and
• The redevelopment of the Holy Faith convent in Killester, with 11 apartments planned in the historic building and 68 others on the 2.4 acre-site.

The same month, DWS sealed its largest Irish deal to date when it agreed to pay €195 million to add the Cheevers Court and Haliday House buildings to its Grundbesitz Europa portfolio. The two apartment blocks developed by Cosgrave on the grounds of the former Dún Laoghaire Golf Club will contain 368 apartments totalling 31,512 square metres due for completion in stages between April 2021 and early 2022.

When DWS published the prospectus detailing the Cheevers and Haliday property’s features for Grundbesitz Europa investors last month, the firm said it had given the purchase an “intensive review” in light of the Covid-19 pandemic. “The fund’s managers continue to assess the development of the housing market in Ireland positively, in particular due to the stable demand for apartments and the existing excess demand,” they concluded.

Baying for blood in Blancharsdstown

Before deciding to become one of Dublin’s largest residential landlords last year, DWS had entered the Irish property market from the retail end. This investment is now at the centre of two High Court cases.

Court records show that A&L Goodbody solicitors issued summary proceeding on behalf of DWS Grundbesitz GmbH against Gap Stores (Ireland) Ltd and Champion Retail Ltd on Wednesday.

DWS Grundbesitz (meaning real estate in German) is the common investment vehicle for the property funds managed by the Deutsche Bank subsidiary. It owns the Westend Retail Park on behalf of Grundbesitz Global. The 2000-built extension to the Blanchardstown shopping centre, complete with 30,000 square metres of retail, restaurant and office space and 1,100 parking spaces, is the fifth most valuable asset in that fund’s international portfolio.

The defendants in the two High Court actions rent units on the property for their Gap Outlet and Champion Sports stores, which are currently closed in application of the Level 5 lockdown.

DWS purchased the Westend Retail Park for €147.7 million in June 2018. This was the firm’s first acquisition in Ireland. All stores were let and fund documents gave an upbeat assessment of the property’s prospects, citing the growing population in the Blanchardstown area and increasing rents. The asset’s latest valuation was virtually unchanged at €147.4 million in an update to investors in September.

The first Covid-19 casualty among Westend Retail Park’s tenants was Laura Ashley, which shut down Irish operations one month into the first lockdown in April and closed six stores here including the one in Blanchardstown.

Now DWS’s legal action reveals a fresh rent dispute with Gap and Champion Sports, which is part of the JD Sports group. This will add to the list of cases brought to the courts by Irish-based landlords since the start of the pandemic. These include the owners Omni shopping centre (which are none other than MKN Property, the developer of DWS’s Prestige residential portfolio above), as well as overseas investors similar to DWS, such as French asset manager MNK Partners which is suing Eason in Galway.