Just two years ago, U+I, the listed British property developer and investor, was hatching plans to invest €500 million in Dublin. Matthew Weiner, a 20-year veteran with the company, which was previously called Development Securities, was back and forth regularly to the capital as his company sought regeneration projects in Dublin 2, 4 and 8. Dublin, he said, was “bristling” with opportunity.

For a period, his company was almost omnipresent – at one stage, it offered to refinance all of one the developer Johnny Ronan’s personal property portfolio out of Nama, while it was also in the running to lead the redevelopment of a 12.8-acre site at the Guinness Brewery.

Neither of those deals came to pass, but U+I was emerging as an influential player in Dublin, working with Ronan and Paddy McKillen on the development of a new facility for Amazon (later sold), as well as building mixed-use projects in Donnybrook and houses in Malahide, two of Dublin’s best-heeled areas.

Over a pint in the Shelbourne Hotel, Weiner was enthusiastic about Dublin’s prospects, telling me that he was here for the long term. Later, he ended his relationship with Ronan after making millions from working with him, but he was still involved in lots of other projects. For a while, everything it did seemed to go right – from selling the site of the former Charlemont Clinic on the Grand Canal to Dalata (making €2.7 million in 14 months) and a Georgian House on Lower Leeson Street for €1.56 million (a gross profit of roughly 50 per cent in 18 months.).

This morning, however, came rather different news, as U+I informed the stock market it had recorded a loss of £50.2 million amid a senior management clear-out. Not all of this loss was due to Ireland, but a good chunk of it was.

Big losses in Dublin

Weiner resigned from the company, replaced by its chief development officer Richard Upton. Also exiting is Marcus Shepherd, its chief financial and operating officer, and the company is due to start a search for his replacement. Property deals gone wrong in Dublin, exacerbated by Covid-19, played no small part in the turmoil inside U+I.

“We have also taken a £10.6 million impairment as we exited our involvement in our joint venture Spectre platform with Colony Capital with immediate effect. The platform was created in 2016 to redevelop commercial properties in Dublin and London,” U+I said in a statement.

Three years ago, Weiner said this joint venture with Colony would invest €300 million in Ireland, London, and Manchester. U+I said it had made an initial capital contribution of €14 million and seeded the venture with two assets, Donnybrook House in Dublin and The Record Store at The Old Vinyl Factory in London.

Weiner said the joint venture had been set up to meet the “shortage” of office space in both markets, a shortage that has now disappeared with tenants exiting leases or seeking rent reductions due to Covid-19.

In relation to its Colony joint venture, U+I said this morning: “The market for letting the five buildings in the platform has however been severely impacted by the lasting effects of the Covid-19 pandemic and a requirement for significant further investment to cure banking positions.”

The company said it had also made net write-downs of £8.1 million across some of its “legacy projects”. In total, its losses were due to a reduction in investment portfolio valuations (£10.3 million deficit); net operating costs including overhead (£14.9 million); and development and trading losses (£25.0 million).

100-day review

Signs of trouble for U + I have been evident for some time. In November things came to a head when Quadrant Real Estate Advisors, a US property lender, appointed a receiver over two high-profile office buildings developed by U+I Group and Colony Capital.

Kieran Wallace, the KPMG head of restructuring in Dublin, was installed as receiver to two companies, Development Securities Properties Donnybrook Limited and Spectre (Ballymoss House) Limited, which are both owned jointly by U+I and Colony. Donnybrook House was bought for close to €10 million and its redevelopment cost an estimated €15 million more.

Spectre (Ballymoss House), meanwhile, is the company used to develop the Hive, an office block in Sandyford in south Co Dublin. This, too, involved an expensive refurbishment. With both sites struggling to meet their interest bills, Quadrant had little choice but to move in and take control of the two assets.

Having done so well in its early years in Dublin things have turned sour quickly for U+I. The firm has halted the payment of dividends and announced a disposals programme of £50 million in 2021 rising to a total of more than £80 million in 2022. A 100-day review of every aspect of the business is also underway.