Monday 5 March 2007

O’Regan negotiated option to buy docklands scheme

Leisure and property entrepreneur Hugh O’Regan negotiated an option to purchase chq, the much-delayed retail scheme in Dublin’s docklands, as part of his lease agreement on the building.

Leisure and property entrepreneur Hugh O’Regan negotiated an option to purchase chq, the much-delayed retail scheme in Dublin’s docklands, as part of his lease agreement on the building.

Documents released to The Sunday Business Post under the Freedom of Information Act show that O’Regan would have had the option to purchase the property for a fixed price after the completion of the first rent review which would take place five years into the lease.

It is understood that O’Regan planned to build a second higher cantilevered building in the airspace above chq if the deal had gone ahead.

In the end however both the Dublin Docklands Development Authority (DDDA) and O’Regan mutually agreed to walk away from the deal.

The DDDA made this official with a letter to O’Regan on September 23, 2005 stating the lease was to be terminated ‘‘with immediate effect from the date hereof by reason of the material breach by the tenant of its obligations contained within the agreement’’.

It followed a letter - seen by this newspaper - that was sent by O’Regan’s legal representatives Matheson Ormsby Prentice to the DDDA’s legal team A&L Goodbody on September 20, 2005, in which it raised the fact that the DDDA had ‘‘consistently failed since September 2004 to provide evidence and confirmation that outstanding snagging works have been completed’’.

The letter also said that O’Regan had ‘‘genuine and very serious reservations about the dampness problem, which has arisen both at basement and ground floor level in chq’’.

O’Regan had been advised it would take a minimum of two years to dry out the building or to ensure there is no recurrence of the dampness and seepage problems.

The letter also reveals that the DDDA was to provide an appropriate tenant for the arthouse cinema and underwrite the rent.

O’Regan had raised various difficulties earlier and the chief executive of the DDDA reported to the board on September 8, 2005 that he had offered to recommend additional concessions to the board, provided O’Regan gave commitments to commence development within a reasonable period.

However, O’Regan ‘‘had failed to respond in any meaningful way and the executive was recommending that the agreement for lease be terminated’’, according to the minutes of the DDDA executive board meeting.

The board then decided that it no longer ‘‘had confidence in proceeding with O’Regan’s project and that the agreement for lease should be terminated and that the authority would move independently with the project’’. O’Regan’s proposal, which was submitted at the end of 2004, included 45 business suites, an exhibition space, conference facility, a bar/restaurant, microbrewery bar, cinemas, spa, swimming pool, gym, wine bar, delicatessen, market, restaurant/nightclub, artists’ studios, shops, a juice bar and kiosks.

On July 7, 2004 the lease was signed between the DDDA and the tenant, a company called FSC Property, which is 100 per cent owned by O’Regan, according to the documents lodged with the Companies Office. O’Regan also signed the lease as the guarantor.

The documents released under the Freedom of Information Act confirm that Harvey Nichols was close to signing a lease as an anchor tenant. According to minutes from a meeting on October 10, 2002, it was to occupy just under 2,000 square metres of space at the scheme.

However there were a number of conditions attached by Harvey Nichols, details of which have been blanked out by the DDDA on the basis that they are commercially sensitive.

A letter from then Director of Property Grainne Hollywood to Harvey Nichols the previous month showed that the original plan was for the scheme to open in October 2003.

Wilson McHardy, one of the letting agents for the scheme, then wrote to Harvey Nichols saying that it was seeking a retail mix to promote repeat visits.

Among the 28 brands it had targeted were Armani, Gucci, Zegna, Ralph Lauren, Tiffany & Co, Agent Provocateur, Nicole Fahri, Space NK, Paul Smith and Joseph.

‘‘Many of these brands have registered interest either direct or via their retained retail leasing agents,” wrote Keith Wilson of Wilson McHardy.

However on April 11, 2003, Patrick Hanly, Harvey Nichols’ commercial director, wrote to Hollywood stating: ‘‘I very much regret that Harvey Nichols has taken the decision not to proceed with the Dublin Docklands Development Authority at Custom House Quay.

‘‘For your records, in the end the decision was taken not to proceed based on our concern over the size of the project.

“Custom House Quay is a destination site and we felt that the total retail offer would not be sufficient to compliment and support a Harvey Nichols operation.

“To a lesser extent there was some concern about the design and the amount of parking that would have been directly available, but I reiterate the main reason for our decision was the size of the project.”

Sunday Business Post

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