Sunday, 1 February 2009

Dunne's D4 dream falls victim to harsh reality

'WE had a boom for a decade and we didn't build anything that anyone will point to, nothing that you could say was iconic."

It was late last year, and Sean Dunne was shooting the breeze in the boardroom of his office on Dublin's Merrion Square.

"And I include myself in that," he added wistfully, as he got up from his chair at the head of the heavy, polished mahogany table to stretch his legs.

Michael Scollard, the man Dunne appointed as project director for the proposed redevelopment of the Jurys and Berkeley Court lands in Ballsbridge, nodded in agreement.

No doubt Scollard had heard such philosophising many times since Sean Dunne first announced his intention in 2005 to transform the tired face of Dublin 4, pledging to bring a slice of Knightsbridge to Ballsbridge.

Attired in his favoured uniform of bespoke three-piece suit, Dunne paused momentarily, before allowing what can only be described as his trademark and somewhat mischievous schoolboy grin to take hold once more.

And then it was back to the bonhomie of banter about the everyday things, sport and politics, and the rest.

Talking to him then, it was almost impossible to conceive the financial burden Sean Dunne was shouldering as a result of his hugely-expensive and clearly passionate plans for a mere seven acres of Ballsbridge land.

All told, the Carlow-born developer's acquisition of the former Jurys and Berkeley Court hotels and the neighbouring Hume House office building set him back an eye-watering €510m, with €135m of that coming from his own hand-tailored pockets.

Mere mortals would have buckled under the pressure long ago, but Dunne has long since proclaimed that failure is not an option in his case.

Speaking to the New York Times last month, the millionaire builder said: "This is the way God made me, with heavy shoulders and an ability to carry a great load."

But that already incredible load became far greater last Friday morning with the near unanimous rejection by An Bord Pleanala of Sean Dunne's plans for a 37-storey tower at the heart of the Jurys Ballsbridge site.

And while sources close to the Mountbrook boss insisted last Friday night that a new plan, on a smaller scale with less capital expenditure and a shorter building time, is viable, and that a new planning application will be submitted, few expect any movement in Ballsbridge anytime soon, given the prevailing economic climate.

Even in the boom times, the demolition and redevelopment of the landmark Jurys and Berkeley Court hotels was seen as a financially risky proposition offering, at best, uncertain returns.

With the arrival of the credit crunch in August 2007, and the subsequent collapse of the global economy, the development topped off with the tower its architect Ulrik Raysse described as "cut like a diamond" drifted further into the realm of one man's dream.

To be fair to Sean Dunne, few of those employed by the banks to predict the flow of the economic cycle had foreseen the latest spectacular implosion in the financial and property markets in time.

Indeed, those who wrote the loan cheques for the man the media variously dubbed the Baron, Squire and even Lord of Ballsbridge are now being seen by Ireland's ever increasing legion of bank critics as having encouraged the rampant speculation that went on in Dublin 4 before the crash.

Looking at the number of big name developers who tried to beat Sean Dunne to the punch in securing Jurys and the Berkeley Court in 2005, it is clear the banks were only too willing to place their bets, doling out money with seeming abandon.

In all, 13 developers submitted tenders for the Jurys building alone, with four of them pitching figures that were within €2m of the amount bid by Sean Dunne.

How the bullish builder arrived at his winning offer of €275m quickly became the stuff of legend in development and financial circles.

The story goes that Dunne and his wife, former Sunday Independent social columnist Gayle Killilea, were sitting in the luxurious Hyatt Hotel in Hua Hin in Thailand on the day tenders for the 4.84-acre Jurys site were due to be submitted. As the deadline of 12 noon drew near, Dunne's solicitor was on the phone from Dublin asking for his final offer for the prized site.

Toying with figures between €253m and €275m, the developer turned to his glamorous wife and asked her to pick any number between 253 and 275 without telling her the reason why.

Having been born in 1975, Gayle plumped for the number 75, believing it to be lucky.

Dunne instructed his solicitor to offer €275m on that basis. Commenting on the method behind what many believed to be madness in an interview afterwards, he said: "After all the work and science that goes into tenders, that's what it boils down to."

In the event, the newly-knighted Lord of Ballsbridge forked out €260m for the Jurys Ballsbridge hotel as he had taken on the site through an investment vehicle, which would see him take on responsibility for certain tax liabilities.

Clearly delighted at his coup, Dunne declared his intention to offer residents of the new Dublin 4 a chance to enjoy concierge living more commonly found in the upmarket neighbourhoods of Manhattan.

Dunne's rivals (and their bankers), meanwhile, clearly agreed with his assessment of the potential locked up in Dublin's embassy belt.

Among the 'losers' in the fight for Jurys were the Clare-born developer Bernard McNamara, who put in an offer that was just €300,000 shy of Dunne's.

Also losing out to the Mountbrook man was his near neighbour on Shrewsbury Road, Redquartz boss Paddy Kelly, as well as Ray Grehan of Glenkerrin Homes.

In hindsight, the big winners in the Jurys deal were the Doyle family, who at the outset were told the Ballsbridge site could possibly fetch €200m. But Dunne's glittering prize wasn't achieved through good fortune alone.

To have his winning bid of €275m accepted by the Jurys Doyle Group, Dunne was forced to engage in an aggressive purchase of the company's shares.

When the Precinct Consortium, comprising businessman Bryan Cullen, David Coleman and JJ Murphy, entered the fray with the backing of the billionaire Reuben brothers, Dunne immediately sensed the danger of a potential takeover of the Jurys Doyle Group, which could have scuppered his purchase of the Jurys site altogether.

The Precinct Consortium put together a due diligence report on the company and looked set to offer €1.1bn for it, or an equivalent of €17.50 per share. To counter this, Dunne was forced to buy up a substantial 29 per cent of the Jurys Doyle shares in four separate tranches to block any takeover of the company in advance of an extraordinary general meeting (EGM) called to approve the land sale. With the deal approved, however, Dunne's appetite for the company's shares didn't recede.

Within weeks, speculation was rife that he would seek to take over the Jurys Doyle group himself, with a view to freeing up its wider hotel property portfolio for residential development.

But the Carlow developer's heart was always set on transforming the select Ballsbridge land belt centred on Jurys. Confirmation of this came when it emerged that he had paid €130m for the nine-storey office block, Hume House, located beside Jurys Hotel and opposite the American Embassy.

His unshakeable belief in Dublin 4 was confirmed in no small measure by the prices achieved on lands adjoining the Jurys and Hume House sites shortly afterwards.

Just three weeks after Dunne had paid a whopping €53.7m per acre for the Jurys site, Ray Grehan of Glenkerrin Homes splashed out an unprecedented €171.5m for the former UCD veterinary college building on nearby Shelbourne Road.

The price tag paid by Grehan equated to an eye-watering €84m an acre. The two-acre site had been expected to sell for just over €120m, but this was easily outstripped by all five of the tenders ultimately submitted.

Commenting at the time on his securing of the Veterinary College site, a jubilant Ray Grehan described it as an opportunity that came around "only once a century".

While Dunne might have been disappointed not to get his own hands on the building, he was able to comfort himself with the knowledge that he had secured the Jurys land for a knockdown price -- relatively speaking.

Six months later, in May 2006, both Dunne and Grehan were left in the ha'penny place with Jerry O'Reilly and David Courtney's purchase of the state-owned Faculty Building by tender from the Office of Public Works.

The €36m the two men paid for the 0.378-acre site equated to an incredible €95m per acre, far in excess of the amount that Lambert Smith Hampton, the estate agent responsible for marketing the property, had expected.

In June that same year, David Daly of Albany Homes entered the embassy belt fray, buying Franklin House for €25m from Malahide-based developer Gerry Gannon.

With Daly's purchase, the price per acre had risen once again, this time to an unfeasible €133m.

The arrival of Bernard McNamara on the scene must have buoyed up Dunne's convictions on his vision for Dublin 4 even further, with the former Fianna Fail councillor paying the Jurys Doyle Group some €288m for the Burlington Hotel.

Shortly afterwards, McNamara followed up the Burlington acquisition with the purchase of the Allianz building next door, paying €100m for the 1.5-acre plot.

The former Fianna Fail councillor added a third string to his Ballsbridge bow in January 2007, heading up a consortium to buy Carrisbrook House for €46m.

Even as the total spend by developers in Ballsbridge surpassed the €1bn mark, nobody in the banks called a halt to what today appears to have been a speculative frenzy.

Commenting at the time, Anglo Irish Bank's head of lending for Ireland, Owen O'Neill, said: "In relation to the much-talked-about site acquisitions in Dublin 4, we believe that developers are taking the lion's share of risk and can afford to do so."

O'Neill added that the banks made decisions to provide funding based on their own appraisals of sites and their potential, rather than taking the word of the developers and their advisors.

Whatever about the availability of funding then and its lack of availability now, nobody, least of all Sean Dunne, could have counted on the strength of the opposition he would encounter from the well-heeled denizens of Dublin 4 when he submitted his planning application in August 2007.

Not even the endorsement of Dublin City Council's senior planner, Kieran Rose, for Dunne's scheme could convince residents both near and far from the site of its merits.

Mountbrook's proposed construction capital investment of €1bn and promise of 970 construction jobs on site over seven years also failed to cut the ice with those living in the area.

While the various residents' associations, backed in no small part by local politicians anxious to represent their constituents' interests, baulked at the redevelopment of the hotel lands, Dublin City Council's senior executives were more amenable.

The decision by the city management in March 2008 to grant permission to Dunne for almost every element of the Ballsbridge development, bar its centrepiece 37-storey tower, provoked some degree of controversy, with fears growing amongst objectors that an appeal could possibly see the project in its entirety being realised.

In the event, 126 appeals flooded in to An Bord Pleanala in relation to Dunne's plans for Ballsbridge, with -- somewhat unusually -- 96 of these expressing their support for the developer. In one submission, Dunne himself called for the reinstatement of the project's centrepiece tower.

Included among the objectors were a number of well-known names resident in the Ballsbridge catchment area.

Undoubtedly, the most high-profile thorn in Dunne's side was the millionaire financier and Ailesbury Road resident Dermot Desmond.

Voicing his disapproval to the development in his written submission to An Bord Pleanala, Mr Desmond described the project as "fundamentally flawed" and "clearly unacceptable".

Desmond's concerns were later expressed on his behalf by Senior Counsel Michael O'Donnell at the Bord's 15-day oral hearing held in Croke Park's convention centre last September.

In a summation of his client's feelings on Dunne's plan, Mr O'Donnell said there was a sense of unreality about the project.

"This development has not a single redeeming feature . It is entirely divorced from the planning reality and planning codes in this jurisdiction," he concluded.

Meanwhile, barrister Colm MacEochaidh, summing up the feelings of the 11 residents' associations he represented at the hearings, urged the Bord to reject the scheme on the grounds that Ballsbridge was not Knightsbridge.

Describing the proposed buildings as "oppressive and monolithic" in design, MacEochaidh said: "The people who live in Ballsbridge have no wish to live in Knightsbridge."

With last Friday's rejection of Sean Dunne's plans for the Jurys and Berkeley Court site, it's safe to say the residents in and around the developer's hotels won't be getting a taste of Knightsbridge living anytime soon.

But with rooms at the Ballsbridge Court, Ballsbridge Towers and Ballsbridge Inn on offer for as little as €37 a night for the month of February, it's clear that the Dunner's sense of humour and determination to make a buck -- be that fast or otherwise -- in Dublin 4 is still very much intact.

A lot Dunne, more to do, as the man himself might say.

Sunday Independent

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