| 8.7°C Dublin

High-profile Irish syndicate hit as £325m real estate deal collapses

A £325m deal to sell prime London offices bought by a syndicate of Ireland's rich and famous in 2006 has collapsed.

The Woolgate Exchange building in the City of London was bought back in 2006 for €390m (£325m) by a syndicate put together by developer David Arnold's D2 Property.

D2, where former Quinlan Private executive Deirdre Foley was managing director alonside Mr Arnold, emerged from nowhere to become a major player in the property scene between 2005 and 2008.

Just like Derek Quinlan, D2 put together syndicates of wealthy Irish investors to buy up a €1.4bn property empire within a matter of just a few years.

Invested

Former Attorney General and AIB chairman Dermot Gleeson is known to have invested in a number of D2 deals, as did Superquinn founder Senator Feargal Quinn, who has included his involvement in the Woolgate Exchange in the Oireachtas register of interest.

D2 put the Woolgate Exchange on the market last year with a price tag of £290m, after getting a "standstill agreement" from lenders when the original financing deal backing the acquisitioon of the property mature and could not be refinanced.

They are even understood to have lined up a buyer, but the syndicate lost control of the Woolgate in February, when a receiver was appointed to help speed up a sale to Malaysian investor Permodalan Nasional Bhd. The Malaysian investor had been brought in well in advance of the receivership, but the subsequent receivership means the former owners are now sidelined in any new deal.

A sale for £270m would have left Irish investors sitting on a loss of around £20m.

The group is understood to include senior figures from the legal and accounting world's as well as property players.

Bondholders now have the whip hand following the receivership. They are understood to be lining up new bidders at around the same price as that offered by the Malaysian investors.

A bondholder source last night said that a sale would cover the bulk of debt owed on the property, but that there was no hope of the Irish investors making back their investment.

However, he confirmed that the lenders had no right to seek any extra payment from the syndicate even if a sale was done at a price that left a shortfall on the debts owed.

The 2006 deal was financed by debts of £304m, including a junior loan from Anglo Irish Bank and a so called Commercial Mortgage Backed Securitisation (CMBS), a complex financing arranged by Credit Suisse sold to international bond holders.

The collapse of the Woolgate Exchange deal was announced in a notice on the Irish Stock Exchange, because of the involvement of the bondholders. D2 remains an active player in the property game, despite the Woolgate deal going sour and some of its loans transferring to NAMA. Last year D2 was reported to be lining up a £200m sale of a property on London's Savile Row for around £200m -- it was bought for £110m in 2006.

Last August it sold 11-12 St James's Square, also in London, to Malaysia's Employee's Property Fund (bought for around £180m), again at a profit for investors.

D2 was not available for comment yesterday.

Irish Independent