Transport firm to cash in on property portfolio
CIE plans to boost bottom line with funds from deals with developers
Published 07/07/2015 | 02:30
Public transport company CIE is planning a major expansion into the property market in an effort to boost its bottom line and help fund services.
The company is to go to the market seeking private sector partners to undertake major redevelopment projects in Dublin, Cork and Galway, the Irish Independent has learned.
The sites to be developed include Tara Street and Connolly stations in Dublin, as well as Ceannt Station in Galway and Kent Station in Cork.
A site near Dublin's Point Village is also likely to be sold for student accommodation.
The move comes following the sale of land and other real estate assets totalling €121m in recent years as the cash-strapped company attempted to reduce deficits.
Last year, its railway arm, Iarnród Éireann, recorded its first growth in passenger numbers since 2007 but ran a loss of €2.2m, a substantial improvement on 2013 when losses ran to €16.4m.
However, it has warned that the "underlying financial picture" within the company remains "extremely challenging".
The CIE pension scheme - which covers workers in Iarnród Éireann, Dublin Bus and Bus Éireann - is €702m in the red, up from €418m in 2013.
A spokesman said the company hoped to reach agreement with the private sector whereby an annual payment, or a percentage of the market rent, would be paid over by the developer in return for use of land.
"The view is to develop agreements to produce income streams which would make ongoing contributions to fund public transport," he said.
However, he declined to comment on what revenues were expected.
"This will obviously be dictated by the market but we are hoping to benefit from strengthened market conditions," he said.
The priority projects are Tara Street and Connolly Station in Dublin, both of which have 10-year planning permissions in place for major developments, including an 11-storey tower at Tara. The process to secure a partner is already under way, and will begin in the autumn for Connolly.
Expressions of interest for a mixed-use retail and residential development at Kent Station in Cork will be sought from September, while it is planned to develop Ceannt Station in Galway on a phased basis, with companies to be sought next year.
There is also a substantial site near the Point Village in Dublin which is expected to go to market before the end of the year. The company is in discussions with Nama about merging an adjoining site it owns, and selling both by public tender, with student accommodation likely to be developed.
The CIE group has experienced a torrid time in recent years, with passenger numbers plummeting and government payments sharply reducing. However, the most recent annual report notes that two of the three companies - Dublin Bus and Bus Éireann - are profitable, but that Iarnród Éireann remains loss-making.
The railway company also warns that the network is "under-funded" given the level of services expected, and that the group has been forced to sell assets in recent years to offset reductions in State funding.
The company currently receives €7.4m in annual rental payments, and is reviewing its portfolio.
The annual reports of the CIE companies warn that congestion is becoming an issue in the greater Dublin area, which is resulting in slower journey times of between 3pc and 6pc on some routes. This could have a major bearing in driving people out of cars and on to public transport.
Dublin Bus expects to be affected by Luas Cross City works. It plans to purchase 90 new buses every year to help reduce costs and add capacity.