Will Citigroup tower be sold at a loss to the Irish?

Published 03rd May 2011

The sale of the Canary Wharf building could make a new record as the biggest ever property deal in the UK, but will the Irish taxpayer get their money back?


Will the Citigroup tower, forced on the market because of the Irish property crash, be sold at a loss?

The Chinese Investment Corporation is reportedly close to buying the 42-storey building, part-owned by an Irish developer, in a deal worth around £1bn.

The tower was put on the market last month under pressure from Ireland's National Asset Management Agency which is seeking to recover hundreds of millions of euros owed by Derek Quinlan, a former tax inspector who gambled in the property market during the Celtic Tiger years with spectacular losses.

Last week, I reported that Quinlan and his UK partner Glenn Maud bought the building at the peak of the property bubble in 2007 for €1.48bn – the equivalent of £1bn at the then exchange rate. So anything north of £1bn would do nicely.

However an informed source, who follows property debt restructuring, has subsequently contacted me to say the company that owns the building "has debt, include swap breakage costs, in excess of £1.2bn – maybe as much as £1.3bn – against the building".

The source says that bailed-out Allied Irish Banks was part of the consortium which backed Quinlan's part of the deal.

It contributed some €300m of the €700m international finance Quinlan secured to buy his 50% share of the deal.

Selling agents Jones Lang put the building on the market on 11 April seeking "offers in excess of £1bn".

It is hoping to set a new record for property deals, beating HSBC's sale of its neighbouring London headquarters in Canary Wharf for £1.09bn in 2007.

But a record is immaterial to the Irish taxpayer, who is on the hook for the full €300m whack invested by AIB.

AIB declined to comment on this loan. But we know that the bank has already sold this debt at a discount of at least 42% to NAMA and written its loss on that loan off.

Source: ' Guardian '

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