Developer joins Arnotts in bid for IN&M site

Property developer, Mr Paddy Kelly, has emerged as retailer Arnotts' partner in the purchase of Independent Newspapers' headquarters in Dublin's city centre, for a reported €25 million.

The Irish Times confirmed last night that Mr Kelly, who was most recently involved in buying Smurfit's former base in Clonskeagh, Co Dublin, is jointly negotiating the takeover of Independent's premises on the capital's Middle Abbey Street. Mr Kelly is understood to be taking a 40 per cent share of the deal.

Mr Kelly has been involved in a number of high-profile deals in the capital. In company with fellow developer, Mr John Flynn, and the McCormack family-controlled Alanis Ltd, he developed the Clarion Hotel in the city's financial services centre and a large apartment complex in Smithfield on its northside. He and Mr Flynn are 75 per cent owners of the Belfield Business Park, which is also in Clonskeagh.

However, neither Alanis Ltd nor Mr Flynn are involved in the bid to buy the Independent's offices. That deal is still being negotiated, but it is understood that the terms are agreed and the parties are close to signing. Neither Arnotts nor Mr Kelly, who was in America, would comment last night.

It emerged this week that Arnotts is negotiating the purchase of two acres of property in the Abbey Street/Henry Street area. Along with the Independent premises, it is also purchasing four properties at 18-21 Henry Street, whose tenants include UK chains Boots and HMV. The total investment is said to be €65 million.

Royal and Sun Alliance is selling 18- 21 Henry Street for €40 million. Arnotts, together with its pension fund, is taking over the properties. The four shops are producing yearly rents of €1.3 million, and are regarded as typical pension fund property investments.

The pension fund is independent of Arnotts and is managed by trustees drawn from the retailer's board and workforce. It earned €32 million from this year's MBO of the former plc, in which it had a 12.8 per cent stake. According to the MBO offer document, it had a surplus of €141.5 million.

At the time of the buyout, led by Arnotts' director, Mr Richard Nesbitt, the fund expressed an interest in taking a stake in the deal. However, the Irish Stock Exchange's Takeover Panel ruled that out. The fund is not involved in the Independent Newspapers' premises deal.

The fact that Arnotts has been involved in purchasing assets has surprised some sources. The company has to repay €215 million to Anglo Irish Bank and €10 million to Boundary Capital over 10 years, as a result of the buyout. Many commentators believed the company would sell some assets to aid it in repaying the debt.

Arnotts left the Irish Stock Exchange last July.