Saturday 17 March 2018

Recriminations after One Spencer Dock sale collapse

The PwC building at One Spencer Dock had been expected to sell for €242m.
The PwC building at One Spencer Dock had been expected to sell for €242m.
Peter Flanagan

Peter Flanagan

The collapse of the sale of the PwC Building on Dublin's north docks has resulted in anger and recrimination, with Nama said to have overreached for the sale.

The office block at One Spencer Dock - the biggest stand alone block in the city - went on the market last year for close to €240m. The sale was being carried out on the instructions of Nama.

At the time, the property was expected to comfortably match its asking price, however that may not now be the case after US investment firm Hines pulled the plug on a deal for the property.

Hines had been expected to buy the block for about €242m with the backing of two European pension funds but has now withdrawn from the sale.

This is the first major Nama sale to fall through, and that has led to accusations that the sale had been mishandled.

One industry source believes that Nama "overreached" on the deal.

"There were bids with secure equity on the table and while it makes sense to go after the highest price, there has to be consideration as to which bidder is in the best position to close the deal," said one industry player.

It now seems two of the three bidders which made it to the final round of bidding last year have now withdrawn from the process since it began in October 2015.

Given that the property has a long lease remaining on it and generates rental income of about €11m per annum, primarily from a bluechip tenant like PwC as well as other sub-leases, the property is still expected to sell for a strong price.

The sale process however is now likely to take close to a year - far longer that most deals of its type have taken in the current market cycle.

At least one Far East-based fund which did not bid for it first time around is now expected to make an offer, while a string of European players are expected to show renewed interest in the property.

This is not the first high profile property deal to fall through in recent weeks.

Blackstone appeared to have a deal to offload its Central Quay office block on the south quays last September but that deal fell apart after the buyer - understood to be a German pension fund - withdrew.

A spokesman for Hines could not be reached for comment. A Nama spokesman declined to comment on the specific deal citing the fact that EY was handling the sale as receiver over the property.

"Any claim that Nama should prioritise any under-bidder ahead of the highest bidder is misplaced," he added.

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