Ballymore Berlin project under pressure

Redevelopment of a Berlin shopping centre is now at a standstill, mired in political and financial uncertainty, writes DEREK SCALLY

NAMA IS “holding a gun to the head” of Sean Mulryan’s Ballymore group to drop a €500 million development in central Berlin, according to well-placed sources.

Five years after spending a reported €200 million on the problematic “Ku’damm Karree” complex on Berlin’s Kurfürstendamm, the project is at a standstill, mired in political and financial uncertainty.

Redevelopment plans for early this year have failed to materialise, as has a new partner demanded by Nama, which was promised last month.

Ballymore group director Paul Keogh said potential partners examined project plans yesterday in Berlin.

“We will be announcing a new partner in June, the partner will be bringing cash to replace debt,” said Mr Keogh. “Ballymore will be the minority in the new deal, but may well still be the developer on behalf of the new joint venture.”

He conceded that “no renovation or repairs have been done . . . the site is deteriorating”.

The Karree is one of Berlin’s cursed sites: a rambling 1970s shopping centre with a problematic layout and few tenants. Ballymore planned to flatten the lot and replace it with an upmarket retail and residential complex. The controversial plan foresaw the demolition of two historic theatres on the site to broaden the facade onto the upmarket Kurfürstendamm shopping boulevard. But after years in limbo, few of the centre’s remaining tenants expect their futures will involve Ballymore.

“We’ve heard nothing from them, but it’s said to be fairly certain they will sell it on and retain a minority stake,” said Martin Woelffer, who manages the two family-run theatres in the complex.

It’s the second major Irish-controlled property project struggling in the German capital. Mayo brothers Michael and Cathal Cannon have become bogeymen in Berlin over their struggle to redevelop two derelict sites at Checkpoint Charlie in the city centre.

The Cannon brothers hope to avert a looming foreclosure auction on the historic site, currently home to kebab and ice-cream stands – with Nama putting on pressure for progress.

The outlook for Ballymore is far less certain, with local partners complaining of being left in limbo. Meanwhile the project’s Berlin spokesman Armin Huttenlocher could not be reached for comment yesterday.

Ballymore says that Berlin bureaucracy, not lack of funds, was the reason for delays with development.

“Once planning granted, money is very available for such a prime site,” said Mr Keogh.

Berlin officials say no planning applications have been lodged.

Internal sources say pressure from Nama has created divisions within the group, which reported a €120 million loss for the financial year to the end of March 2011.

One camp is said to favour continuing as a minority partner with the original upmarket concept, including a new €50 million rooftop theatre.

Another camp reportedly wants a fully commercial site with no cultural element, which would maximise return but cause ructions among Berliners.

“Nama is holding a gun to their head and have told them plainly, they don’t see any future for the project,” a source added.

Berlin property analysts say Ballymore’s problems began when they paid over the odds for the site in 2007, then insisted on going it alone.

“Many people told them early on to take a German partner to boost their credibility and trust in the project,” said a Berlin property investor who asked not to be named. “Now they are looking for a new partner, but it’s too late.”