University of Limerick (UL) is to write down the value of a former Dunnes Stores site which it bought in Limerick city centre in 2009 by €3 million in its financial accounts.
The circumstances over the university’s €8 million purchase of the site sparked controversy at the Dáil’s Public Accounts Committee last year amid claims that college staff were unable to provide written records of a valuation for the site.
In a message to staff on Wednesday, UL president Kerstin Mey said a €3 million “financial impairment” in its financial accounts will reduce the university’s revenue reserves for year ended September 30th, 2023.
“The university will conduct a review of accumulated revenue reserves in order to identify non state reserves which will be designated to fund this impairment,” she wrote.
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In the message, Prof Mey said a valuation report on the site was carried out by Power Property Ltd on April 5th, 2019, who suggested an appropriate value of €6.5 million (ex VAT) for the university.
UL acquired the property later that month at a price of €8 million, plus VAT.
In September 2023, Power Property said the market value of the property for the university had reduced to €5.85 million.
In its opinion, the firm said prospects for Ireland’s commercial real estate market had since come under pressure from increased interest rates and the downward pressure on international economies.
In her message to staff, Prof Mey said accounting policies required a review of the site’s value.
As of September 2023, she said a difference between the property’s net book value – which includes legal and other professional reports – and its market value had given rise to an impairment charge of just over €3 million.
In the meantime, she said work was taking place to progress the future of the planned UL city centre campus.
She said sustainable development of the site was a “key project for the revitalisation of the city and a vital part of the Limerick World Class Waterfront project”.
“The preliminary business case aims to ensure that the future envisaged by the university for this location is reflected in any evolving plans. This is expected to be completed in March 2024,” she wrote.
“As owners of this strategic city centre site, it presents an excellent development opportunity for the university.”
The Public Accounts Committee last year heard that the university had already advanced plans in 2019 to establish a city centre campus on the nearby Opera site and had carried out extensive preliminary work, including commissioning consultants.
On April 2nd, 2019, it applied to the Higher Education Authority seeking funding, and submitting detailed plans for its development.
However, three days later, on April 5th, a proposal to buy the Dunnes Stores site for €8 million was added to the agenda of a meeting of the university’s governing authority under the “any other business” heading.
The committee also heard that a valuation conducted two years earlier had put the value of the site at around €3.5 million.
However, university officials argued that the earlier valuation was a desktop valuation conducted with a view to designating the site on the register of derelict property, rather than a commercial one. UL staff said Dunnes Stores had sought €11 million for the site.
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