Saturday 18 November 2017

Talks to sort future of Treasury's €300m property portfolio begin

BoI headquarters and Cork and Stillorgan shopping centres among prized assets

Donal O'Donovan

Donal O'Donovan

Talks are under way on the future of a €300m property portfolio that includes Bank of Ireland's Dublin headquarters, Cork's Merchant's Quay shopping centre and Dublin's Stillorgan shopping centre. It follows the collapse of Treasury Holdings into liquidation earlier this week.

The €300m 'Opera CMH' portfolio was just one part of Johnny Ronan and Richard Barrett's huge property empire.

The properties involved are some of the best-performing commercial properties in the country, with occupancy at 98pc.

The buildings are beyond the reach of liquidators appointed to Treasury this week by KBC Bank because they were financed on the bond markets back in 2006. Instead, talks on the future of the properties are taking place among bondholders who are owed €425m.

The 'Opera' vehicle borrowed €375m against the Irish assets in 2006, where long-term tenants include Tesco and FAS.

The assets fall outside the main Treasury liquidation because Treasury's Real Estate Opportunities unit used a commercial mortgage-backed security (CMBS) structure, a complex borrowing technique that allowed different bondholders to take different levels of risk.

NAMA is owed €85m as part of the same deal, but its debt is last in the queue to be repaid, suggesting the State agency will recover little on the loan.


The bonds are traded on the Irish Stock Exchange but are mainly held outside Ireland.

There has never been a missed payment on the bond debt, and cash to honour an interest payment due on October 15 is already in place.

However, the debt falls due for repayment in January and the entire structure is in negative equity, making it impossible to refinance. This week, bondholders have been told that they are immune from the Treasury collapse, thanks to their iron-clad debt structure.

Liquidators Michael McAteer and Paul McCann, who now control Treasury, will continue to manage the Irish properties and continue to charge a fee to the 'Opera' portfolio for doing the work.

With the January refinancing deadline now pressing, advisers from investment bank Cairn, which has been hired to manage the process for bondholders, said this week that "legal, property and financial due diligence" has already been done to determine the options now available.

No decisions on the future of the portfolio have been taken yet, and any changes will have to be approved by lenders.

Industry experts point out the most likely scenario is for bondholders to agree a 'standstill' in January, opting to not call in the loans and instead try to keep the structure in place long enough for a managed sell-off of assets.

Meanwhile, liquidators to the rest of the Treasury Holdings empire are understood to be getting to grips with the massive job of sorting through the company's assets and its obligations this week, including establishing relations with the 'Opera' bondholders.

Irish Independent

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