Friday 23 March 2018

DAA faces huge hit in McNamara property deal

Documents reveal joint venture company's plans to sell off office blocks in airport park

John Reynolds

The Dublin Airport Authority (DAA) -- whose €612,000-a-year chief executive Declan Collier departs for a new job at London City Airport next year -- looks set to lose millions on a badly timed property joint venture with broke Nama client developer Bernard McNamara that was backed by Bank of Scotland.

Documents obtained by the Sunday Independent show that joint venture company Brooklyn Properties, in which the bank is the single largest shareholder, intends to sell off several office blocks and a site in Cork Airport's Business Park as soon as possible.

"At December 31, 2010, the company's property portfolio comprised four buildings, which are fully constructed with leases attached; one property in the advanced stages of completion; and a development site.

"Subject to receipt of satisfactory offers, the directors' intention is to dispose of these assets once construction is complete rather than hold them for their investment potential," the documents say.

While the company had spent €30.9m on developing the offices by the end of 2008, €5.3m was written off in 2009 and 2010.

Although it is unclear how much of this the bank might recover from any sales, commercial property values have plummeted by an estimated 65 per cent since the peak, suggesting that the shareholders in the company could lose up to €20m in total.

Bank of Scotland, which has a 38 per cent shareholding -- and which began winding down its Irish business last year -- is owed €23.6m by Brooklyn Properties, documents show. The DAA owns the second largest shareholding at 37 per cent.

Most of the money was spent after the firm increased its bank loans from €3.7m to €23.1m in 2008, as the property market was beginning to collapse and just as the first stages of the global economic crisis were beginning to take shape.

At least one office block and a number of floors in several others owned by the company are vacant, according to the listings of agents HT Meagher O'Reilly.

Elsewhere in Cork Airport Business Park, buildings are occupied by multinationals including Amazon, BNY Mellon and GlaxoSmithKline.

While Mr Collier has pocketed the second-highest pay package of any semi-state director in recent years, the DAA has a chequered history when it comes to property development.

As this newspaper revealed last year, the DAA also became involved in an ill-fated deal with developer Liam Carroll, whose empire went into receivership in 2009 owing €1.2bn to a number of banks.

Their joint venture, Turckton Developments, borrowed €33.75m from National Irish Bank to develop land close to Dublin Airport.

And in April 2008, former Taoiseach Bertie Ahern unveiled a doomed €4bn masterplan for the development of apartments, hotels and offices at Dublin Airport City on 2,500 acres of land surrounding the airport.

Sunday Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business