Heartbreak hotel: €18m loss as five-star project under threat
Published 20/01/2011 | 05:00
THE company behind the almost completed five-star hotel at Dublin's Grand Canal quarter notched up losses of more than €18m in 2009 and admits it might not get funding to finish the hotel.
The position is revealed in accounts just filed for Birchford Investments, which also has 84 unsold completed apartments in the quarter, along with five empty retail units.
The company is controlled by developer Terry Devey, who was a major force behind the reinvigoration of the Smithfield area and who owned the Chief O'Neill's hotel until last summer.
A substantial whack of Mr Devey's loans are believed to have been transferred to NAMA over the summer, though he also has relationships with non-NAMA banks ACC, Ulster Bank, IIB and Bank of Scotland (Ireland).
The latest accounts for Birchford show the group notched up bottom-line losses of €18.5m across activities in development and nursing homes.
The losses don't include any write-downs to Birchford's Grand Canal apartments and retail units as the directors "believe the valuation may not be sufficiently reliable given the current uncertainties which prevail in the market place".
The hotel is carried at "cost less write downs to estimated recoverable amounts based on a contract for the sale of the hotel".
The Dublin Docklands Development Authority has an agreement that allows it to buy back the hotel if it is not completed to its satisfaction.
In notes to the accounts, Birchford's directors acknowledge that the company's ability to complete the development is "dependent on the continued financial support from its banks".
"There can be no guarantee that the successful completion of the development will continue to be funded," the directors say, while pointing to ongoing negotiations with banks.
The accounts, which were signed off last May, make no reference to NAMA even though the filings show Birchford has dealings with three NAMA banks -- Irish Nationwide, AIB and Anglo Irish Bank.
A spokesman for NAMA declined to comment on Birchford, citing client confidentiality.
On March 31, 2009, Birchford had short-term bank debt of €104m and longer-term bank debt of €3m. The loans are "secured by fixed and floating charges over the assets of the group and a personal guarantee given by Terence Devey which includes the assignment of his life insurance policy".
Another €21.3m is owed to "investors" who have "certain rights" over Birchford's commercial units as well as over a €35m portfolio of nursing homes owned by the group.
The trading figures for 2009 show Birchford's turnover more than halved to €14m, while operating losses almost trebled to €9m. Staff numbers remained largely uncharged at 238.