€32m town shopping centre sold for a fraction of boom value
Two sites in Castleblayney, Co Monaghan for which Zurich Bank extended a loan of €32m in 2007 to finance the development of a shopping centre were sold prior to being offered for auction by Allsop last Thursday at a fraction of their boom-era valuation.
The 25-unit Castleblayney Shopping Centre had been due to go under the hammer in Dublin's RDS at a reserve price of between €320,000 and €440,000.
An adjoining 2.27 acre parcel of land meanwhile carried a reserve price of €70,000.
Both properties were however acquired by a single buyer in advance of being offered for sale for "significantly above their reserves", said a spokeswoman for Allsop auctioneers.
The Castleblayney centre's former owner and developer, Jim McConnon, began assembling the site in 2004 with a view to expanding his existing shop - a Supervalu which he owned and operated on the town's Main Street. With property prices already spiralling, McConnon paid a combined €6.5m for two sites. Following the addition of €1.6m in groundworks and other costs the shopkeeper's total outlay ended up approaching €10m - borrowed from AIB.
Professional plans drawn up for the completion of the centre assessed the total cost at €32m. However AIB pulled its support for the project in late 2006.
Following AIB's withdrawal, Zurich Bank took its place as lender on the project, extending a loan for the €32m to McConnon.
While he continued to work on the Castleblayney Centre up until 2009, by March of that year, the project was on its knees.
Prior to the collapse of the economy, a professional valuation appraised the sites as being worth €15.5m and €14.5m apiece.
McConnon was adjudicated bankrupt after Zurich Bank obtained a €32m judgment against him over his unpaid loans.
In the course of delivering a judgement in McConnon's case in 2012, Mr Justice Peter Kelly told him he was sorry for him, saying: "Every day of the week, I am dealing with people in similar circumstances. I know it's no consolation to you, but you're not alone."
Sunday Indo Business