Richard Curran: Tears over money gone up in smoke -- but it's time to move on
A RECENT work visit to the Ballsbridge area of Dublin provided some interesting food for thought about Ireland's boom, bust and whether we are now finally moving on.
While sitting in the Ballsbridge Hotel (formerly Jurys Hotel and also formerly to Sean Dunne what the Little Big Horn was to Custer) I could hear the sound of major demolition work going on next door.
Builders were tearing down the last remaining building on the site of the old Veterinary College. They were clearing the last part of the two-acre site, which was bought in late 2005 for €171.5m by developer Ray Grehan (his Alamo).
Most of it has been a car park for the past four years. Now under the new ownership of the Comer brothers, they were tidying up some loose ends, presumably to prepare it for development.
The workmen were going, what seemed to be, virtually round the clock in a frenzy of activity. In the middle of the banging, drilling and roaring, I could make out what occurred to me might actually be the sound of progress.
However, it was also the sound of our money going up in smoke. Just how much did we all lose on the Grehan purchase of that site, financed by AIB back in 2005?
Well here are the figures. Grehan's company Kintene acquired the site for €171.5m. It borrowed €110m in a loan from AIB, secured on the site itself, a guarantee from Ray Grehan and his brother Daniel to pay the interest, and a joint guarantee from them of €3.5m, according to the 2007 accounts.
However, in the 2009 accounts, the personal guarantee for €3.5m does not appear. The rest of the money appears to have come from a company in the Grehan group called Glenkerrin Finance. Some of that was presumably Grehan's own money from profits on other developments, but equally some of it may well have been borrowed. In total, Glenkerrin Finance was owed €78m by Kintene.
Let's assume about €20m of the Glenkerrin money was itself borrowed from Irish banks and not paid back. That leaves a total Irish bank exposure to the project of €130m.
The site had been falling in value like a stone from 2007 onwards. In 2008, Kintene wrote €100m off the value of the site and another €30m in 2009. At that stage it was being used as a car park, possibly the most expensive one in the world at more than €80m per acre.
Kintene went into receivership and Grehan went into bankruptcy in the UK. It was placed on the market last year with a guide price of €15m and was sold to the Comer brothers for €22m. The taxpayer loss here is somewhere between €90m and €110m.
It is a wonder any of us would want to even look at it as we drive past it on Shelbourne Road, let alone listen to workmen doing preparatory work on it.
But we have to move on. The builders employed on that site today are getting paid and benefiting from work created by the new owners. The site has planning permission for a seven-storey building and a mix of apartments, retail and office space.
The new owners may seek to reapply for an amended planning permission, and perhaps alter the mix more in line with the market demand for new office space in the city.
At a purchase price of €22m they have a chance of making some money on it and providing some decent employment along the way.
The same picture is emerging elsewhere in Dublin. Builders are busy right now refurbishing the Burlington Hotel (now the DoubleTree Hilton) just up the road. The 501-bedroom hotel was bought by Bernard McNamara and Bank of Scotland (Ireland) for €260m at the height of the boom.
Last year, US private equity giant Blackstone bought it for €67m. Rooms are being refurbished and the whole basement car park is being rebuilt. Construction workers are getting a wage out of it, and hotels such as the former Burlington are booming.
The Morrison Hotel, now owned by a Russian billionairess, had a €16m rejuvenation. Its former owner Hugh O'Regan had substantial borrowings from Anglo Irish Bank on the hotel, which represent another taxpayer hit.
It remains extremely difficult to grasp the series of events that led to all of the citizens of the State picking up the tab for these financially disastrous decisions. And we still haven't received adequate explanations.
But as the new year of 2014 begins, it is heading towards nine years since Ray Grehan bought the Veterinary College site, Sean Dunne bought Jurys Hotel and Bernard McNamara bought the Burlington.
There is a sense that finally things are moving on. We are all still left with the debt of those kinds of transactions but at least we can hear the sound of people working and see something positive happening at these scenes of former financial carnage.