Building firm in €155m loss as development loses value

Accumulated losses at a subsidiary controlled by Galway building firm JJ Rhatigan increased in 2010 to €155.2 million, figures show.

This follows Rhatigan Commercial Developments Ltd recording a loss of €50.2m, relating mainly to a further writedown of €49.3m in the developer’s Heuston South Quarter development in Dublin.

The mixed-use development was lauded by former taoiseach Brian Cowen as “one of the most significant developments in Dublin in the last decade”.

According to accounts just filed with the Companies Office, the loss of €50.2m in the year to the end of August 2010 follows significant losses incurred by the company in the two preceding years.

The 2010 writedown follows a write-down of €78.2m in 2009 and €26.9m in 2008 relating to the Heuston South Quarter development — the total write-down over the three years amounts to €154.4m.

The Galway-based company is one of the largest developers in the country and its website boasts that the Heuston South Quarter is “a notable €400m development spanning 120,000 sq m consists of a hotel, apartments, commercial office space and retail units”.

Mr Cowen launched Heuston South Quarter in December 2008, three months after the collapse of Lehmann Brothers in the US.

In a speech, he described the development in a location as “second to none” and as “a model for integration and sustainability and heralds the way for future developments”.

The JJ Rhatigan subsidiary intended to sell all of the site’s residential and commercial units.

However, in the accounts, the company’s directors concede that “given conditions in the Dublin property market, the directors decided to seek to let and manage a number of units on short-term lettings, until market conditions improve and sales can be achieved”.

Revenues at the firm last year declined by 60% from €14m to €5.6m. Cost of sales last year, totalling €7.6m, resulted in the firm recording a €2m gross loss.

The accounts just filed with the Companies Office show that the company had bank loans with Bank of Scotland, Ireland totalling €212.7m at the end of August 2010.

The bank loans are secured by way of a floating charge over the property, assets and undertakings of the company. The filings state that “the company is in ongoing discussions with its lender”.

The note states: “Based on discussions to date, the directors are not aware that the support of its lender will not be forthcoming on acceptable terms and have formed the view that it is appropriate to prepare the financial statements on a going concern basis”.

The figures show that the company’s director, Padraic Rhatigan, provided a guarantee and indemnity for €24.9m.

The accounts show that the firm valued its Heuston South Quarter in its books at €255.7m prior to the write-down.