US investment firm moves closer to Shelbourne loans

A US investment firm is on the verge of taking control of the loans secured against the Shelbourne Hotel, as the influx of overseas money into the commercial property sector continues.

Kennedy Wilson, which has spent more than €300m on Irish property in the last year, agreed to buy Bank of Ireland’s loans that were used to finance the purchase of the Shelbourne in Dublin by a host of developers including Bernard McNamara and Jerry O’Reilly, who bought the hotel in 2004 and carried out a lavish renovation of the hotel.

Bank of Ireland and Anglo Irish Bank funded the deal to the tune of €103m each, but the deal went sour after the property bubble collapsed.

The loans expired in 2009 and the lenders have been able to call in the loans at any time since then.

The potential terms of the deal have not been disclosed, but the off-market transaction effectively gave Kennedy Wilson control over 50pc of the five-star hotel.

Having secured the Bank of Ireland share of the Shelbourne loans, Kennedy Wilson is now believed to be in the box seat to buy the Anglo portion of the loan, which is part of the Project Evergreen portfolio of IBRC loans that are being sold off at the moment.

The deadline for final bids for the Evergreen loans passed last week. A host of firms are thought to be in the market for the Project Evergreen loans, which is made up of a host of corporate loans. Arnotts are apparently looking to buy back their loans from IBRC, as are fuel firm Topaz.

The Shelbourne Hotel loans, however, are seen as being some of the plum assets on offer and numerous investors have made firm bids for the IBRC loans that financed the Hotel deal.

If the deal goes through it will mark Kennedy Wilson’s latest foray into the Irish property market, which has attracted numerous foreign investors since the crash.

In July, the company said it had spent €306m on a portfolio of 14 properties in this country. The mix of office and retail assets were almost entirely focused in the prime Dublin areas of Dublin 2 and Dublin 4, with only one property outside the capital.

The firm has also invested in Bank of Ireland before selling off its stake at a huge profit last month. Source: The Irish Independent.