Review knocks €18.5m from the value of Spencer Dock city site

Developer Treasury Holdings has seen its landmark Spencer Dock site in Dublin lose close to one-fifth of its value following a review of its portfolio.Government policy and a declining demand for office space are thought to be behind the dramatic fall in the worth of what is one of the largest remaining sites in the city.

Treasury subsidiary Spencer Dock Development Company is developing a mix of commercial and residential property on the 51-acre site. Ultimately, the €2 billion development will comprise 3,000 apartments, and more than three million square feet of office space and shopping and leisure facilities

An annual valuation of the site, most of which was formerly owned by CIÉ, was carried out by DTZ Sherry FitzGerald at the end of 2002. According to accounts filed recently with the Companies Office, it marked down the open market value of the development property by €18.59 million. At the end of 2001, the site was worth €99.47 million.

The company landbank had already been devalued by €4.74 million in 2001.

A spokesman for Treasury Holdings blamed a change in taxation policy by the Government in the Budget of December 2002 for the change. In that Budget, the Minister for Finance, Mr McCreevy, raised the level of stamp duty on development land to 9 per cent from 6 per cent.

However, property sources say that alone would not account for the scale of the revaluation. They argue that developers of sites such as Spencer Dock are struggling to achieve the prices of recent years as a surplus of office space emerges in the city.

They said that, in the circumstances at the end of 2002, when there was uncertainty about the commercial property outlook, the scale of the devaluation was not surprising.

Spencer Dock Development Company secured planning permission for the site in early 2003 and construction has begun. An earlier proposal, involving a national conference centre was rejected by An Bord Pleanála.

Spencer Dock Development is controlled by the principals of Treasury Holdings, Mr John Ronan and Mr Richard Barrett, through associate companies Littlebeck Ltd and Ardquale Ltd.

Businessman Mr Harry Crosbie has a one-third stake in the venture through his company Follyford Ltd.

All three are directors of Spencer Dock Development. A fourth director is U2 accountant Mr Trevor Bowen.

Spencer Dock Development agreed to develop the CIÉ land and its own property under an agreement with CIÉ in 1998.

That agreement, which will see CIÉ receive 17.5 per cent of the rents realised on the site, has come in for criticism from Government and Opposition politicians. However, CIÉ has consistently defended the deal as the best way to achieve the highest value for the docklands site.

According to the accounts, Spencer Dock Development owed more than €6.5 million in management fees to Treasury Holdings for 2002. Payment depended on finance arrangements being in place for the development. This has only recently occurred, with notes to the accounts stating that credit approval for a loan to fund the first stage of development was secured in the latter part of 2003.

Spencer Dock Development expects to draw down this money early this year. The bank lending requires the shareholders to put additional funding into the development.

Spencer Dock Development has also entered commitments with commercial tenants that will see it take over their existing leases when they move to Spencer Dock.

The accounts note that the company had received more than €5.8 million up to October 2003 when the 2002 accounts were signed off. With deposits of €20,000 a unit, that indicates that about 290 of the 600 units coming on stream in the first phase, at the end of 2005 or early 2006, had been taken up. However, Mr Barrett has acknowledged a fall-out rate of around 16 per cent - people who had reconsidered and withdrawn their money.

The company made a political donation of €6,349 to Fianna Fáil in 2002, the accounts show.