Treasury Holdings plans a massive commercial development on one-third of the Millennium Dome site as part of its involvement in the Legacy project.
The Irish group has an 85 per cent stake in the consortium which is the brainchild of the politically connected English property entrepreneur Mr Robert Bourne who wants to build a hightech business park inside the Dome.
The Dome structure and its related buildings and service occupy only twothirds of the 63-acre site - which is valued on the open market at £300 million-plus - for which Legacy is paying £125 million sterling (€210 million). The remaining one-third of the site beside the River Thames at Greenwich is unused and Treasury will seek to develop it as offices and possibly hotels and apartments. The site is across the river from Canary Wharf, the massive 1980s office development which is now one of the most sought after locations for business in London. When the location and the infrastructure that is being put in place - including a tube line - is taken into account - the £300 million valuation put on the site is "a bit soft" according to Mr Maurice Harte, the chief executive of Treasury Holdings. The commercial potential of the site puts a different complexion on the decision by Mr John Ronan and Mr Richard Barrett - the men behind Treasury - to get involved in the project. The Legacy consortium will have to spend up to £300 million converting the Dome into a business park. The Irish investors would be required to put up the bulk of the money, but as is normal in property deals much of the money will be borrowed.
Treasury believes in the project in its entirety, stresses Mr Harte. It is not a case of opportunistic Irish investor paying lip service to the Legacy business park concept to get 20 acres of prime London real estate on the cheap. "It is fair to say that we have approached this from a commercial perspective but the concept of a high-tech business park in the centre of London with an instantly recognisable address is a very attractive one," he said.
Mr Harte said that the company is confident that it will make money from both the business park and the subsequent commercial development. The project is expected to create up to 14,000 jobs.
The high-tech business park concept is not a new one, but the idea of a campus in central London is novel, he believes. There is a lot of goodwill towards the Dome - partly because of the drubbing it has received from the British media - and this should ensure the project's success, he believes. A number of significant companies have pledged their support for the project including British Telecom and Sun Microsystems. With an £800 million property portfolio in Ireland and another £100 million already invested in the British market, Treasury has plenty of assets against which to raise the money. But the £300 million that will be required for the Dome - in addition to the £125 million purchase price - is dwarfed by the £1.2 billion that Treasury also wants to spend developing Spencer Dock in Dublin.
"We tend to fund projects on a modular basis. What we have put in place for the Legacy project will not affect our ability to carry out other plans," according to Mr Harte.
The company's recent unsuccessful approach to buy Green Property for £660 million gave some indication of who their supporters might be. The Green bid was to have been funded by Deutsche Bank Real Estate Private Equity which is said to be one of a number of finance houses that have backed Treasury in the past. Mr Ronan and Mr Barrett have also put together consortiums of Irish and middle eastern investors to give them the leverage to do big deals, according to Dublin property sources. A credit line of £150 million from Barclays Bank has been put in place for the Dome project, according to sources close to the consortium.
Mr Ronan and Mr Barrett became involved with Legacy in June of this year. Mr Bourne and another Legacy director, Mr Thomas Quinn are described as "people Treasury would have known for a long time," by company sources. The negotiations with the British Government will be led by Mr Bourne. Mr Bourne, who has strong links to the Labour Party wants to "transform the Dome into a world-leading community of new businesses, dedicated to developing the knowledge-based skills they have acquired in some of the country's leading academic and professional workplaces".
The British cabinet decided on Friday to grant preferred bidder status to Legacy, which means that it will now negotiate exclusively with them. The consortium had threatened to withdraw its offer if the Government continued to prevaricate. Mr Harte and Mr Barrett will represent the Irish group on the board of Legacy. Treasury has experience of developing a number of business parks in Dublin including Central Park in Sandyford, Co Dublin and will be hands-on investors, according to Mr Harte.
The operation of the park will be left to Legacy which plans to create 14,000 jobs within three years.
