Wednesday 13 December 2017

Colony to pay Nama €455m to secure Project Tolka loans

Valued in the region of €250m, Burlington Plaza is one of Project Tolka's best assets
Valued in the region of €250m, Burlington Plaza is one of Project Tolka's best assets
Ronald Quinlan

Ronald Quinlan

US investment firm Colony Capital is set to pay in the region of €455m to acquire Nama's €1.5bn Project Tolka loan portfolio.

The deal, the agreement of which was first reported by the Irish Independent five weeks ago, is expected to be concluded by the end of January and will see Colony take control of loans mainly linked to developers John Flynn, Paddy Kelly and the Dublin-based McCormack family, who control the property investment vehicle Alanis.

Among the portfolio's most significant assets is the Burlington Plaza office complex on Dublin's Burlington Road. With an estimated value of €250m, it has high-profile tenants including Sky Ireland, Amazon and Bank of Ireland. Other valuable assets tied to Project Tolka include the Clarion Hotel in Dublin's Liffey Valley, the Belfield headquarters of betting giants Paddy Power and the former Harcourt Street children's hospital, which is occupied by Dublin law firm BCM Hanby Wallace.

While the €455m price being paid by Colony Capital suggests a discount of approximately 70 cent in the euro on Project Tolka's €1.5bn par value, the actual discount will be less as a result of Nama's decision to remove loans linked to a number of the portfolio's assets prior to the sale.

It is understood loans linked to the four-star Carton House Hotel developed by Paddy Kelly were removed by Nama from the portfolio, to be sold separately.

Nama's aim of delivering on its target of building 20,000 new homes by 2020, meanwhile, also saw it strip out a number of major residential assets from Project Tolka. Included in these are a 68-acre site in Bray, Co. Wicklow, and lands at Carrickmines in south Dublin.

The agency also secured a 10-acre site in Bray for the development of two new schools.

The Project Tolka sale process, which was run for Nama by Eastdil Secured, part of Wells Fargo Bank, attracted competing bids from Madison International Realty and Lone Star.

Project Tolka's purchaser, Colony Capital, is already well-established in Ireland. The LA-based firm is currently financing several major Dublin commercial property projects, including the Vertium Building on the Burlington Road and the €300m and Spencer Place in the IFSC, both of which are being developed by Johnny Ronan's RGRE.

Yesterday, the involvement of the LA-headquartered real estate giant in the Irish market deepened further following the news that it has entered into a €300m joint venture with the UK-based U+I Group to invest in underperforming office properties in Dublin, along with London and Manchester.

In a statement on the matter, U+I Group said its partnership with Colony Capital had been seeded with two of its existing assets: The Record Store at The Old Vinyl Factory in London and Donnybrook House in Dublin.

The company purchased the 6,700 sq m (72,000 sq ft) Donnybrook House for €9m in December 2014 and is refurbishing the building with a view to attracting creative and tech-focussed business as tenants.

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