Colony Capital sells off stakes in major projects in pivot to digital infrastructure
The financial backer of Dublin's two biggest commercial property projects is accelerating its exit from the capital after coming under financial pressure.
Colony Capital has agreed to sell its stake in the Facebook and Salesforce European headquarters developments to an undisclosed international buyer.
The company had bankrolled the two projects, which are being developed by Ronan Group Real Estate (RGRE), as part of its aggressive move into Irish commercial real estate after the financial crisis.
It is understood the new investor, which has no other interests in the Irish market, will take a majority stake in each property.
Neither RGRE nor Colony was available to comment.
Colony's earlier-than-expected exit from the prestigious developments, neither of which is occupied yet, marks a major retreat from the Dublin commercial property scene, where it has been active for several years.
The US-based real estate investment group had funded new developments and refurbishments in Ballsbridge and the Docklands in recent years, both with RGRE and UK property company U+I.
But last year, the US parent company began selling assets after one of its investment arms defaulted on a €3.2bn loan secured on a portfolio of hotels and nursing homes hit by the pandemic.
It appointed Eastdil Secured last July to seek buyers for its Irish assets, including the Facebook and Salesforce complexes.
U+I has terminated its five-year joint venture with Colony, which included shared ownership of four properties in Dublin. According to stock market filings, Colony has taken over 100pc of the share interest leaving U+I with significant losses approaching £20m (€22.5m).
Market sources said Colony is now winding down its European commercial real estate fund and will be looking to sell those properties, which include the Hive in Sandyford and Carrisbrook House and 23 Shelbourne Road in Ballsbridge.
Colony also owns majority stakes in Burlington Plaza office complex on Burlington Road and the Three Ireland headquarters on Sir John Rogerson's Quay. These were acquired in a €455m deal for Nama's Project Tolka portfolio in 2017.
Colony is involved in other RGRE projects, including the proposed Waterfront South Central and Aqua Vetro high-rise developments along the River Liffey.
The company sold $695m (€782m) in commercial and industrial property in 2020 in a frenzy of deals to raise capital for what it says is a pivot towards digital infrastructure.
RGRE is understood to have been seeking alternative strategic partners since 2019, when Colony first indicated its change of strategy. It is working with investment management company Oak Tree on the former Irish Glass site in Ringsend, Dublin.
The Facebook scheme, called Fibonacci Square, is pre-let to the social media giant for its European Headquarters for 25 years from 2022. It is believed to be the Irish markets’ biggest ever office letting. The Salesforce campus – subject of numerous planning disputes over its proposed height – has a lease starting in March, although construction is not complete.