Wednesday 16 October 2019

Sean Dunne's time, energy and talent as a developer is lost to lengthy legal war

Developer Sean Dunne is pictured on New York’s Park Avenue in 2013
Developer Sean Dunne is pictured on New York’s Park Avenue in 2013
Sean Dunne's his ambitious tower plan for the embassy belt of Ballsbridge in Dublin 4
Sean Dunne’s former site, on Dublin’s City Quay, is now Grant Thornton’s HQ.
Dunne’s vision for his former Jurys Ballsbridge site is being realised by Chartered Land at Lansdowne Place
Ronald Quinlan

Ronald Quinlan

When developer Sean Dunne unveiled his hugely-ambitious plan in September 2007 to deliver a piece of London's Knightsbridge to Dublin's Ballsbridge on the site of the former Jurys and Berkeley Court hotels, it's likely he already harboured fears that the tide was going out on Ireland's then economic miracle, and that his D4 dream might well go with it.

What he could not have known, however, was just how devastating the looming financial crisis would prove to be for this country, and the degree to which he, as one of the property sector's most recognisable players, would become a poster boy for the crash.

And he never could have imagined that 11 years on, he would be facing into another 10 years of bankruptcy. But that's precisely where he is this weekend, notwithstanding the resurgence of the Irish economy and the return to prominence of other boom-era developers such as Johnny Ronan, Ballymore's Sean Mulryan, Chartered Land chief Joe O'Reilly, and Michael O'Flynn.

The wording of last Tuesday's ruling from Ms Justice Caroline Costello extending Dunne's Irish bankruptcy until April 2028 - on foot of proceedings brought by official assignee Chris Lehane opposing the developer's automatic July 2016 discharge -could hardly have been more damning.

In the course of her 97-page judgment, Ms Justice Costello described Dunne, among other things, as being a "deeply dishonest" witness who had engaged in "wholesale non-compliance" of his statutory obligations.

In pushing the developer's automatic exit date from bankruptcy out by another decade, she said he had demonstrated an "incredible attitude" to the process.

While Dunne has said he is "deeply disappointed and shocked" at the judgment and intends to appeal it "as soon as possible", it's hard to get away from the fact that the time, energy and talent he possesses could be better spent doing what he does best: delivering new homes and prime offices.

It may not make me popular to point this out, but in the course of his career here in Ireland, Sean Dunne delivered over 3,500 houses and apartments in Dublin and the Greater Dublin Area.

The largest of those developments saw the Carlow-born builder construct 1,400 houses at Charlesland, in Greystones, Co Wicklow.

So, as the Government clutches at straws for a solution to a housing crisis which may yet come to threaten its own survival, it's inarguable that it would benefit from having more developers with Dunne's undoubted ability at its disposal. For as much as Housing Minister Eoghan Murphy and Taoiseach Leo Varadkar defend themselves against political attacks by citing increases in the number of planning permissions, such statistics don't put roofs over peoples' heads in the way that skilled developers do.

In writing this, I'm fully aware that the vast majority of Sean Dunne's critics, and there are many of them, will point to his 'Celtic Tiger' plan for the redevelopment of the Jurys and Berkeley Court Hotel site as being the height of folly.

In the depths of the great recession, it may well have appeared to be just that, as the land the developer had assembled at a cost of €400m plunged in value to below €100m.

With the passage of time, however, the quality of the Dublin 4 site and the rest of the property portfolio Dunne acquired, albeit at a high price, is being proven.

Dunne's vision for the Jurys and Berkeley Court site is already in the process of being delivered by Joe O'Reilly's Chartered Land at Lansdowne Place. Prices for apartments on the grounds once occupied by the former Berkeley Court Hotel range between €825,000 for a one-bed apartment to €7.5m for a 715 sq m (7,696 sq ft) penthouse, and have been attracting wealthy Irish and international buyers since being brought to the market last year.

Elsewhere within the scheme, plans are being progressed for the delivery of a new 211-bedroom hotel, while the former Jurys Hotel continues to trade successfully as the Ballsbridge Hotel under a lease arrangement with Dalata.

The adjacent Hume House, which Dunne acquired for more than €100m as part of a larger transaction in 2006, is once again being spoken of as one of the most exciting and valuable office development opportunities in Dublin's embassy belt.

Having been valued by Nama at a lowly €23.75m in November 2009, the property secured €35m when it was sold to Irish Life in 2016. The site's planning permission allows for the 7,600 sq m (81,804 sq ft) office building's demolition and its replacement with a new, and far more valuable, structure more than twice its size at 16,900 sq m (181,909 sq ft).

Dunne's purchase for €200m of four office blocks at the front of AIB's Bankcentre headquarters in 2006 was another deal that the commentariat scoffed at as the economy fell over the proverbial cliff.

But had he managed to navigate his way through and out of Nama, as others did, he might well have found himself delivering on a plan similar to the one developer Johnny Ronan is now progressing. Having secured Dunne's former site with his funding partners, Colony Capital, for €67.5m in 2015, Ronan is expected to kick-start the development of Facebook's new EMEA headquarters there within weeks.

The commencement of works on the 30,900 sq m (333,000 sq ft) Fibonacci Square scheme by Ronan's company, RGRE, will represent the first step in the delivery of a wider 65,000 sq m (700,000 sq ft) campus on the AIB Bankcentre site, capable of accommodating 5,000 employees.

The remainder of the Dublin 4 site is divided into two sections, which are owned respectively by the Serpentine Consortium and a European syndicate assembled by Davy.

Had the impact of the global financial crisis not been so acutely felt here in Ireland, Sean Dunne might also be reaping huge rewards from the numerous sites his companies acquired in the Dublin Docklands before the crash.

One good example is the site the developer had on the waterfront at Princess Street on City Quay. While the site was valued by Nama in 2009 at just €1.5m and carried a par debt of €17.34m -with €1.86m of that owed to the State's so-called 'bad bank' - in 2016 it was the subject of a €125m forward purchase by Irish Life. The company outbid five overseas investment funds to finance the development and secure ownership of a new eight-storey headquarters building for Grant Thornton.

With the cost of delivering the building estimated at €70m, profits of about €55m were shared out between Nama and US investor Oaktree Capital Management, as well the Bennett Group, who handled the construction contract.

A small number of private investors including Frank Kenny, a senior adviser to Hibernia Reit, were also reported to have profited from the transaction.

Dunne would also have been well placed to capitalise on the proven appetite of international financial institutions and US tech giants for a foothold in the Docklands, with the 0.91-acre site he owned next to what is now the Central Bank's new headquarters on North Wall Quay.

While the plot was valued at €5m by Nama in November 2009, today it would easily command a guide price of at least €40m based on the sums being demanded and achieved in the immediate vicinity.

Only two weeks ago, developer Johnny Ronan's RGRE and partners, Colony Capital, agreed to pay in the region of €180m - or €39.13m per acre - for the nearby 4.6-acre 'Project Waterfront' site.

Sunday Independent

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