Hines out to re­cruit in­vestors for Cher­ry­wood project with Icav split

Irish Independent - Business Week - - BUSINESSWEEK - Gretchen Frie­mann

US prop­erty be­he­moth Hines has over­hauled the fund that owns the vast Cher­ry­wood site in South Dublin – one of the largest de­vel­op­ment land­banks in the State – as it pre­pares to sell down parts of the project to in­ter­na­tional in­vestors.

The Texas-based cor­po­ra­tion re­struc­tured its ownership of the real es­tate in May 2015 when it shifted the as­set into an ultra tax-ef­fi­cient fund known as an Ir­ish Col­lec­tive As­set Man­age­ment Ve­hi­cle (Icav).

Un­der this struc­ture, money flow­ing in and out of the ve­hi­cle is ob­scured from pub­lic view.

Ear­lier this year Hines opted to split the en­tity that holds the ma­jor­ity of the Cher­ry­wood strate­gic de­vel­op­ment zone, the Hines Cher­ry­wood De­vel­op­ment Fund Icav, into a num­ber of smaller funds.

The move paves the way for in­ter­na­tional in­vestors to take a stake in the mam­moth hous­ing project, which will re­sult in the con­struc­tion of 4,000 homes and a new town cen­tre, com­plete with shops, of­fices, a ho­tel and cin­ema. It is en­vis­aged the fully-de­vel­oped Cher­ry­wood SDZ will sup­port 8,000 homes.

Sources said global pen­sion funds, sovereign wealth funds and pri­vate eq­uity firms are all viewed as pos­si­ble stake­hold­ers in the Hines con­trolled project.

While Hines is mov­ing to di­ver­sify its ex­po­sure to Cher­ry­wood and in­ject fresh funds into the de­vel­op­ment, it will con­tinue to steer the con­struc­tion and project man­age­ment of the strate­gi­cally im­por­tant site.

Records com­piled by the Cen­tral Bank of Ire­land show that in May the prop­erty gi­ant es­tab­lished two off­shoot funds to the prin­ci­pal Cher­ry­wood hold­ing ve­hi­cle, with the es­tab­lish­ment of a sec­ond land de­vel­op­ment ve­hi­cle and a sep­a­rate re­tail fund. In June it es­tab­lished a multi-fam­ily fund.

Hines de­clined to com­ment on the re­struc­ture.

But sources close to the com­pany said the move fa­cil­i­tates sep­a­rate bank­ing and fund­ing op­tions for the Cher­ry­wood project and stressed the move was en­tirely ap­pro­pri­ate.

Hines’s phased sell­down of the sprawl­ing land­bank has been an­tic­i­pated for some time. Last year Hines sold two lots at Cher­ry­wood to the ac­quis­i­tive listed-res­i­den­tial de­vel­oper Cairn Homes for €21.5m and took an op­tion to buy a third lot for €9.2m.

News of the change to the Cher­ry­wood fund struc­ture comes as Hines pre­pares to sub­mit its plan­ning ap­pli­ca­tion for 1250 apart­ments and a town cen­tre to Dún Laoghaire-Rath­down County Coun­cil within the next two weeks.

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