Ireland's O'Reilly, Abu Dhabi fund poised to buy Dublin's Ballsbridge site

One of Ireland's richest men is in position to control one of Dublin's most expensive and tony sites. Reports suggest that property developer Joe O'Reilly and his Chartered Land group are teaming with Abu Dhabi Investment Authority (ADIA) to acquire the former Jurys and Berkeley Court hotels in Dublin, comprising almost seven acres in the Ballsbridge embassy district. Word is the bid to buy is currently at €155 million, a huge discount to what developer Sean Dunne paid for the property in 2005: €380 million.

Dunne had hoped to build a 38-story tower on the site when he bought the block, but his plans never got off the ground, reports Ireland's Independent. Lenders, including Ulster Bank, took control of the land in 2009 when the property market collapsed. Ulster Bank is now the seller.

Dunne had acquired the sites from the Doyle hotel group during the years of the Celtic Tiger, a term referring to Ireland's economy between 1995 and 2000, a period of rapid real economic growth fuelled by foreign direct investment, and a subsequent property price bubble that rendered the real economy uncompetitive.

“It’s the Knightsbridge and Mayfair of Dublin,” Tom Dunne, a property lecturer at the Dublin Institute of Technology, told the Irish Examiner. “It’s really the best location in terms of where middle-class people live and where they want to be.”

The underbidder for the tract is believed to have been London & Regional, a former owner of the Four Seasons hotel in Ballsbridge, reports the Irish Times. Others in the final stage of bidding were Irish builder Cairn Homes, Colony Capital in partnership with Irish businessman Paddy McKillen, and U.S. investment group Capstone.

Though the sale process is not yet complete, it's understood that O'Reilly's bid will win in the end. Ironically, O'Reilly and his businesses are reportedly one of the National Asset Management Agency's (NAMA) biggest debtors. (NAMA was created by the Irish government in late 2009 in response to the Irish financial crisis.)

Shrewdly, the deal is reportedly being fully funded by ADIA, the sovereign wealth fund that is estimated to control assets worth as much as US$800 billion, and, since the property is not related to NAMA, NAMA is unlikely to thwart the deal. The plan would be for ADIA to be the owner and Chartered Land the manager of the site.

As the Independent further reports, the recent sale of other hotels, such as the Westin in central Dublin, which was bought by Denver billionaire John Malone in a €65-million deal, the two hotels "would be attractive for their redevelopment value as much as a going concern."

There is reportedly existing planning permission for more than 550 apartments across 11 blocks and a 150-bedroom hotel. That planning will expire in 2021.

Ireland's Mess
Not unlike the U.S., Ireland faced similar financial calamity post-2007, and is still fighting its way back out of it. During that time, many Irish hotels went into foreclosure. Back in 2012, it was estimated that at least one in six Irish hotel rooms was under bank control, with 56 percent of these controlled by NAMA.