Colony Capital seeks buyer for stakes in prime Dublin offices

US investment firm Colony Capital is believed to have initiated a process with a view to disposing of its interests in Irish real estate, which it holds directly and indirectly.

The Los Angeles-headquartered private equity giant is understood to have made a number of targeted approaches to potential suitors.

Colony currently has interests in a number of Dublin’s highest-profile office properties either directly or indirectly, and as part of a joint venture with the British property group, U+I.

Colony's most significant assets include a 75 per cent stake in the Burlington Plaza office complex on Burlington Road and a 72 per cent share in the headquarters of Three Ireland on Sir John Rogerson's Quay. With the two properties carrying an estimated value of up to €204 million and €120 million respectively, the sale of Colony's interests could potentially command in the region of €232 million. The US firm acquired its share of both properties as part of its purchase for €455 million in 2017 of Nama's €1.5 billion Project Tolka loan book. The deal saw Colony take control of loans mainly linked to developers John Flynn, Paddy Kelly and the Dublin-based McCormack family, who control the property investment vehicle Alanis.

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Colony’s Irish portfolio also includes shares in a number of Dublin office buildings with U+I. Located mainly in Dublin 4, these include Donnybrook House, 23 Shelbourne Road and Carrisbrook House.

Quiet offer

In the case of 23 Shelbourne Road, Colony and U+I began offering the property to the market quietly in February of this year for about €25 million. While news of the sale surprised some, coming as it did just nine months on from the partnership’s acquisition of the property, the move was said by sources at the time to be part of a wider strategy for its Dublin 4 portfolio. Central to U+I and Colony’s plan was the refurbishment and extension of Carrisbrook House.

Colony and U+I are also joint owners of the Hive at the Sandyford Business District in south Dublin. Known previously as Ballymoss House, the redeveloped office block is understood, at one stage, to have been considered by Google as a potential location for the ongoing expansion of its Dublin-based workforce.

Outside of its various interests in the capital's existing office infrastructure, Colony Capital is the funding partner for the numerous developments being delivered currently by Johnny Ronan's Ronan Group Real Estate (RGRE). These include Salesforce's new European headquarters at Spencer Place and the Project Waterfront site in the Dublin docklands, the 23-storey Aqua Vetro tower on Tara Street, Fibonacci Square, and the 350,000sq ft of office space RGRE is delivering as part of Facebook's new European headquarters in Ballsbridge. It remains unclear, what impact, if any, Colony's efforts to dispose of its other Irish interests will have on its arrangements with RGRE.

Debt defaulting

The news of Colony’s move comes just days after it disclosed that its portfolio companies had defaulted on $3.2 billion of debt secured by hotels and healthcare-related properties. The company said it had received a “notice of acceleration” covering $780 million of the defaulted debt in a regulatory filing to the US Securities and Exchange Commission (SEC).

While Colony said last Friday it was in “active negotiations with all lenders” to extend debt falling due this year, it warned there could “be no assurances that the company will be successful in such negotiations”.