British Land has paid £33.5 million (€42.5 million) for a 50 per cent share of Dunloe Ewart's Cherrywood development in south Dublin. In addition, to cement the relationship between the two partners in Cherrywood, British Land has paid a little more than £6 million for a 5 per cent equity stake in Dunloe Ewart. The shares were bought last week for €0.41 (£0.32), a slight premium to the price in the market at the time.
British Land already owns the St Stephen's Green Centre and has a half-share in the International Financial Services Centre in Dublin. There has been speculation for some months that British Land would become a backer of the Cherrywood development, and the final confirmation of the joint venture is not a big surprise.
While Dunloe Ewart has grown enormously, industry sources said the £800 million cost of developing all phases of Cherrywood over the next decade would have undoubtedly put pressure on Dunloe's resources. With British Land having injected almost £33.5 million into the joint venture and being responsible for its full share of the remaining development costs, that potential pressure on Dunloe's finances has been substantially eased.
Dunloe chairman Mr Noel Smyth said that bringing in a joint venture partner who would bear a full share of Cherrywood's development costs would allow Dunloe to proceed with its other major projects. These include a £100 million development near Dublin Airport in partnership with Aer Rianta as well as projects in Belfast and Dublin.
"Not having a partner would have slowed down Cherrywood and some other projects," said Mr Smyth.
The deal with British Land places an underlying value of £67 million on the Cherrywood land, boosted to £75 million by a recent sale of housing land to William Neville & Sons. The sale of the 50 per cent of Cherrywood will result in a pre-tax profit of £14.5 million and after-tax profit of around £10 million.
Cherrywood, off the Bray Road near Loughlinstown and due to be bisected by the south-eastern motorway when that development is completed in four years, is one of the State's biggest development projects. The first phase of 110,000 sq ft is under construction, of which 65,000 sq ft of space has already been pre-let to Lucent Technologies.
A planning application for the second phase of 250,000 sq ft will be submitted to the planning authorities. The overall plan for Cherrywood envisages a 1.2 million sq ft science and technology park, with Dun Laoghaire/Rathdown County Council as a partner in the first 750,000 sq ft. There will also be 30 acres of District Centre lands which will be a mixed-use development of retail, offices, hotels, restaurants and leisure facilities. An area of 130 acres has also been zoned for a golf course.
Mr Smyth said he approached British Land initially about investing in one of Dunloe's projects in Northern Ireland last year, but this ultimately produced the investment in Cherrywood. He added that it was British Land's idea to take the 5 per cent stake in Dunloe, something unusual for British Land which does not normally take equity stakes in other property companies.
British Land has been heavily involved in Irish property development for many years, having developed the Setanta Centre in Dublin in the 1970s. The St Stephen's Green shopping centre was developed in the late 1980s, while British Land joined forces with Irish developer Hardwicke to develop the contract for the IFSC in Dublin's docklands.
