UK funds to buy Liffey Valley for €350m

A 50 per cent stake in Liffey Valley was offered at €300m to €400m in July 2008 – now the entire complex is selling in that price range, writes JACK FAGAN

OWNERSHIP OF the Liffey Valley shopping centre in west Dublin looks set to change in the coming weeks.

Two UK investment funds are in advanced negotiations after offering €350 million for the centre and an adjoining development site of 7 hectares (17.3 acres) that will accommodate the second phase of the retail scheme.

FC Reit Asset Management has teamed up with Area Property Partners to buy the complex on the M50 which has been granted full town status.

Owners Morley Fund Management and Grosvenor Estates (controlled by the Duke of Westminster) first announced in July, 2008, that they were seeking offers between €300 million and €400 million for a 50 per cent stake in the complex.

By then the storm clouds were already gathering: the banking crisis was beginning to affect businesses on both sides of the Atlantic and there was a marked fall-off in consumer spending because of the impending recession.

With our worst fears now realised, the property market has taken a hammering, none more so than the commercial property sector where capital values are down by around 50 per cent.

Should the sale of Liffey Valley be completed as expected, it will be seen as the most important transactional evidence of the huge fall in values that has taken place.

Several Irish property companies looked at the investment prospects at Liffey Valley but did not go as far as making formal offers, in some cases because of the extreme scarcity of bank credit.

There was also unease among interested parties about another adjoining six-acre site with town centre zoning which is owned by Barkhill, a company controlled by Grosvenor and Cork-based O’Callaghan Properties.

When the 50 per cent stake was first offered for sale, the centre was producing a rent roll of €31.31 million from the 46,400sq m (499,445sq ft) of retail and leisure space.

Barkhill recently lodged a planning application for a further 62,243sq m (670,000sq ft) of mixed-use space, including a large supermarket which the centre does not have. Early in 2007, a price of €50 million was sought for a residential site of 2.87 hectares (7.1 acres) which is expected to accommodate 575 apartments beside the shopping centre. There were no takers for the land which runs along the N4 Dublin-Galway road almost directly across the road from the new Hermitage private hospital.

Under founder Leo Noé, Reit Asset Management has bought several major property portfolios over the past eight years with Area Property Partners, formerly known as Apollo Real Estate Advisers. Reit merged with FC in 2008.

Within Ireland FC is a strategic investment partner for the life insurance company Friends First. Last May FC Reit launched an opportunity fund to acquire investment properties once values edged towards the bottom end of the market.