Ulster Bank weighs up ex-Dunne hotel offload

Bank mulls sale of Irish hotels once backed by developer in toxic assets run-down

Developer Seán Dunne with a model for the proposed development on the site of Jurys and the Berkeley Court, Ballsbridge.

Developer Seán Dunne with a model for the proposed development on the site of Jurys and the Berkeley Court, Ballsbridge.

Thu, Mar 27, 2014, 08:04

Ulster Bank is considering offloading its interest in the three Dublin hotels it backed Seán Dunne to buy for almost €380 million in 2005 in two deals that surpassed all previous records.

It emerged yesterday that the lender’s parent, Royal Bank of Scotland (RBS), is considering selling its subsidiary’s holdings in about 40 Irish hotels as part of an overall run-down of toxic assets. Reports suggested they would have a total value of €400 million.

The properties include the adjoining Jurys (now the Ballsbridge Hotel), Towers (now the Ballsbridge Towers) and Berkeley Court (now the Clyde Court) hotels in Ballsbridge, Dublin, which Mr Dunne, the now bankrupt property developer, bought in late 2005 from the Jurys Doyle group for €377 million in two of the highest- profile transactions of the time.

In October 2005 he acquired the Jurys Ballsbridge and Towers hotels for €258 million, the highest per acre price paid for real estate in the Republic. The following month he bought the Berkeley Court for €119 million.

Ulster Bank provided the finance to Mr Dunne, and subsequently syndicated part of the loans to Netherlands-based Rabobank and Icelandic lender Kaupthing, which was bailed out by its own government.

Plans to redevelop the site as a high-rise residential and commercial centre ran aground when the property market collapsed. The hotels remained open.

The three banks took control of the properties in 2009. The High Court declared Mr Dunne bankrupt last year while the National Asset Management Agency is challenging his bankruptcy discharge in the US courts.*

Neither Ulster Bank nor its parent would comment yesterday, but the possible sale of the Irish hotels is part of a structured disposal of a pool of toxic assets held by the RBS group estimated to be around €45 billion at the end of 2013.

In an agreement with the UK government, which controls the group, those assets are being run down through an external bad bank, RBS Capital Resolution (RCR). Ulster’s share of that amounts to €9 billion, and it has to dispose of this by the end of 2016.

Ulster recently hired Eastdil Secured, a division of US bank Wells Fargo, to oversee the sale of Project Buttons, its interests in commercial property loans totalling €850 million.

There is growing interest in the Irish hotels market – last week, newly floated hotel operator Dalata raised €265 million when it floated in Dublin.

* This article was edited on March 27th, 2014