Monday 12 October 2009

Massive writedown in value of Irish Glass Bottle site

The controversial Irish Glass Bottle site in Dublin has been valued at around €60 million in a recent valuation conducted by auctioneers working on behalf of the state-owned Dublin Docklands Development Authority (DDDA).

The valuation marks an approximate 85 per cent writedown in the value of the site from its original reported purchase price of €413million, The Sunday Business Post has learned.

The writedown means the taxpayer is sitting on a paper loss of €87.5 million on the investment. The taxpayer is exposed to the huge fall in the value of the site because the DDDA is a 26 per cent shareholder in the consortium that bought it.

The enormous scale of the write-down reflects the extent of the fall in value of some development sites. Falls of this magnitude could result in Nama ultimately paying a lot less than the estimated €54 billion for property loans on the banks’ balance sheets.

Phil Hogan of Fine Gael, who sits on an Oireachtas committee which has been examining the controversial purchase by the DDDA, said the reports of a valuation of around €60 million on a site that was reportedly bought for €413 mill ion shows the ‘ ‘ tot al contempt’’ that the DDDA had for taxpayers’ money. The committee is meeting again to discuss the DDDA issue on Tuesday week.

The new valuation will also be a blow to the other shareholders in the Becbay consortium which acquired the site.

The other shareholders are multimillionaire property developer Bernard McNamara, who held 41percent of the consortium, and multimillionaire tax adviser Derek Quinlan, who held 33 per cent. McNamara funded his share of the Becbay deal with the help of equity provided by the private clients of Davy Stockbrokers.

Earlier this year, the Davy clients were told the value of their investment had been written down by 60 per cent.

A spokeswoman for the DDDA said she could not confirm the valuation when asked. ‘‘I can’t confirm the figures," she said. ‘‘We regularly value our properties."

She said the annual report of the DDDA would be with Minister for the Environment John Gormley in the next couple of weeks. Publication of the accounts has already been delayed by several months.

Sunday Business Post

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