Thursday 8 December 2016

Semi-state DAA drops a fortune on big land deal

Dublin Airport and Gannon loan going to Nama

Published 16/05/2010 | 05:00

GERRY GANNON: Developer
GERRY GANNON: Developer

The cash-strapped Dublin Airport Authority has incurred "significant" losses on a €22m land deal to buy a 20-acre field with builder Gerry Gannon as markets were collapsing. Loans related to this deal are bound for Nama.

  • Go To

Last week, the Sunday Independent revealed that the loss-making DAA had ploughed into the overheated property market at the height of the boom with developers Liam Carroll and Bernard McNamara. Joint venture companies that bought these lands and assets had racked up borrowings of nearly €60m.

Savills sold the 20-acre Parnells GAA playing fields beside the airport to the state agency in early 2008. The land is owned by Gatland Properties, jointly owned by developer Gerry Gannon and the DAA, which was advised by CBRE. The DAA's stake is held through a company called Skyzone.

"The land was purchased, with the short-term objective of providing additional long-term car parking facilities proximate to Dublin Airport," a spokesman for the DAA told the Sunday Independent. "However, various planning conditions imposed by An Bord Pleanala "rendered the project uneconomic at that time". The DAA believes the fields have "significant longer-term value due to its location close to the proposed Metro North alignment from the city centre to Dublin Airport".

The land deal was funded by borrowings from AIB, where DAA chief executive Declan Collier now serves as a board member. The property loan was agreed before Collier was appointed to the AIB board as a public interest director on behalf of the State. "DAA follows standard governance arrangements to deal with any potential conflict of interest situations," according to the semi-state body.

AIB is transferring close to €24bn worth of property loans over to Nama, with DAA partner Gannon one of the 10 largest borrowers under the new body's remit. "It is the understanding of the DAA that NAMA will assume control of this property," according to the DAA.

Development land has slumped in value over the past three years. A 50-acre site near the airport -- twice the size of the DAA property -- has a price tag of just €2.5m.

The DAA has not revealed the level of losses it faces in relation to this deal.

"DAA can confirm that it has reflected the carrying value of its share of assets in Gatland based on an assessed market value, which, in line with market values generally, represents a significant discount of original cost," the airport operator said last night.

The DAA has insisted that it was not on the hook for its subsidiary's borrowings from AIB. "DAA's only guarantee relates to future interest-only payments on the DAA's share of the loan, in the event that it is not met by Gatland. Skyzone has not issued any guarantees in respect of the debt." It declined to say whether the loan was being paid back or was impaired. "This is a matter for Gatland Properties," according to DAA, which owns 50 per cent of Gatland.

Dublin Airport's debt situation has deteriorated, with Standard & Poor's cutting its rating recently over fears that the airport's financial situation will suffer as passenger numbers tumble.

Dublin Airport has net debts of over €1.25bn as it funds a massive expansion and building programme. The downgrade was announced before volcanic ash caused chaos in the aviation industry, which will further hit passenger numbers.

Sunday Independent

Read More

Promoted articles

Editors Choice

Also in Business