Saturday 18 November 2017

Hines out to recruit investors for Cherrywood project with Icav split

An artist's impression of the Cherrywood town
An artist's impression of the Cherrywood town

Gretchen Friemann

US property behemoth Hines has overhauled the fund that owns the vast Cherrywood site in South Dublin - one of the largest development landbanks in the State - as it prepares to sell down parts of the project to international investors.

The Texas-based corporation restructured its ownership of the real estate in May 2015 when it shifted the asset into an ultra tax-efficient fund known as an Irish Collective Asset Management Vehicle (Icav).

Under this structure, money flowing in and out of the vehicle is obscured from public view.

Earlier this year Hines opted to split the entity that holds the majority of the Cherrywood strategic development zone, the Hines Cherrywood Development Fund Icav, into a number of smaller funds.

The move paves the way for international investors to take a stake in the mammoth housing project, which will result in the construction of 4,000 homes and a new town centre, complete with shops, offices, a hotel and cinema. It is envisaged the fully-developed Cherrywood SDZ will support 8,000 homes.

Sources said global pension funds, sovereign wealth funds and private equity firms are all viewed as possible stakeholders in the Hines controlled project.

While Hines is moving to diversify its exposure to Cherrywood and inject fresh funds into the development, it will continue to steer the construction and project management of the strategically important site.

Records compiled by the Central Bank of Ireland show that in May the property giant established two offshoot funds to the principal Cherrywood holding vehicle, with the establishment of a second land development vehicle and a separate retail fund. In June it established a multi-family fund.

Hines declined to comment on the restructure.

But sources close to the company said the move facilitates separate banking and funding options for the Cherrywood project and stressed the move was entirely appropriate.

Hines's phased selldown of the sprawling landbank has been anticipated for some time. Last year Hines sold two lots at Cherrywood to the acquisitive listed-residential developer Cairn Homes for €21.5m and took an option to buy a third lot for €9.2m.

News of the change to the Cherrywood fund structure comes as Hines prepares to submit its planning application for 1250 apartments and a town centre to Dún Laoghaire-Rathdown County Council within the next two weeks.

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