# Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his shirt?



## Raskolnikov

I was reading the Phoenix Christmas annual recently and there was a great article about Sean Dunne and the Ballsbridge purchases that took place there earlier this year. 

To give people a bit of background information. Sean Dunne is the man who bought the 4.84 acre Jurys Hotel site in Ballsbridge for €260m which worked out at €54m an acre (an Irish record at the time). Because of access concerns to the site, Dunne then purchased the Berkley Court Hotel for €119m, €57m and acre (breaking the record he himself had set with the Jurys Hotel site). The purchase of the sites was financed by a 5.25% interest bond compliments of Ulster Bank. The plan for the 7 acre site has recently been unveiled too with Dunne forseeing "bringing Knightsbridge to Dublin" by developing a mixed use site of cafes, bars, restaraunts, light retail and offices as well as 32-storey block of apartments. It's expected that to break even on the site purchase alone, he'll have to price at €600,000 per apartment and €1,000,000 to make a decent profit.

Not content with sitting on some of most expensive land in Dublin, he then set out to purchase AIB's head office on four acres of land only to lease back to the AIB at €11m p/a. The cost of this? A cool €200m. the plan is that in five years time, AIB HQ will be torn down and replaced with another similar development to the aforementioned Jurys Hotel site.

I have no idea how Sean Dunne can sleep safely in his nearby Shrewsbury Road home while having nearly €500m of unperforming debt hanging over him. Especially considering that he'll be sitting on this compounding debt for at least four years before he'll be seeing any return on it. Can anyone see Dunner getting out of this without losing his shirt? I'd love to see him pull it off, but I can't help but think he's screwed!

Do the moderators have a problem with this sort of discussion?


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## Howitzer

*Re: Sean Dunne, Dunne-for?*

He'll be all right, aparently if things get stretched he's going to rent out one of the rooms in his Shrewsbury Rd pad to a Polish plumber under the rent-a-room scheme.


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## Brendan Burgess

*Re: Sean Dunne, Dunne-for?*

Please note that discussion of the future of the housing market is suspended on Askaboutmoney until someone does a balanced piece on it. Any further posts on house prices will be deleted.

Brendan


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## daltonr

*Re: Sean Dunne, Dunne-for?*

Did I read that correctly,  we could end up with a situation where Ulster Bank owns AIB Bankcentre?

From what you're saying above all the contruction going on at AIB would be for nothing, it's all going to be torn down almost as soon as it's complete.

I can't see how that would make sense.   If that was the plan then surely they'd have stopped all development by now?    Or perhaps they have, I haven't been around in a while.

-Rd


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## baby_tooth

*Re: Sean Dunne, Dunne-for?*

its a very ballsy play,

but doesn't look like ulster bank got a great deal on this.

aib are paying 11 of his aporx 25 million annual interest payment.
He obviously has interest cover for at least a year on the balance, but it is flying close to the wind!...i'm supprised ulterbank bet thier annual proifts on one deal...

fiar play to him.


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## markowitzman

*Re: Sean Dunne, Dunne-for?*

what equity has dunne put into deal?


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## JohnBoy

*Re: Sean Dunne, Dunne-for?*

i was just about to ask that. there was an article in one of the sunday papers about the financing for the purchase & development of the ringsend. the developer was only fronting a minimal amount whilst the banks and a consortium of private investors (arranged by Davy's i think) provided the lion's share of the financing. the reason that he can sleep so well at night it that most of the the money involved is not his!


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## Towger

*Re: Sean Dunne, Dunne-for?*



daltonr said:


> Did I read that correctly, we could end up with a situation where Ulster Bank owns AIB Bankcentre?


 
Not Ulster Bank, but the Royal Bank of Scotland. Don't forget they all had to reapply for their jobs!

Towger


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## Murt10

*Re: Sean Dunne, Dunne-for?*



Raskolnikov said:


> I have no idea how Sean Dunne can sleep safely




I don't think he has anything to worry about. 

There is an old saying that if you owe the bank $1000, you're in trouble; while if you owe the bank $1 million, the bank is in trouble. in thiss case we are talking about many multiples of $1m.

I would sleep far better owing the bank that sort of  money rather than someone normal mortal who owes them 40k on CC a 20k overdraft and an few bob here and there (all at extortionate interest rates) and a job that could move abroad in the future.

The Government isn't goint to let this project fail. if there is a problem they will bail him out. Remember AIB and Insurance Corporation of Ireland, Long Term Capital Management etc. if the major banks are allowed to fail they society as we know it is finished and a major depression will follow.


Murt


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## StoppedClock

*Re: Sean Dunne, Dunne-for?*

I think this loan is no longer on Ulster Bank / RBS books but has been sold on to US Investors.


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## Afuera

*Re: Sean Dunne, Dunne-for?*



Murt10 said:


> The Government isn't goint to let this project fail. if there is a problem they will bail him out. Remember AIB and Insurance Corporation of Ireland, Long Term Capital Management etc. if the major banks are allowed to fail they society as we know it is finished and a major depression will follow.


 
What do you reckon the government could do to bail him out should it all go pear-shaped? Will they end up buying all of those luxury apartments, and turn them into corporation homes so they can create a new ghetto in that leafy part of D4?

I think if the government jumped in to safe a businessman that made a bad descision, the general public would go ballistic. I certainly wouldn't like to see my hard earned taxes spent in this manner! I'm guessing also that recent EU regulations on government intervention in companies would prevent them from jumping in to safe the banks if they run into difficulty.

IMHO this hyper-optimistic idea that everything will be alright in the end and the government will pick up the tab for any bad moves that people and companies make is quite damaging. If everyone thought like that then it essentially removes any personal resonibility and the buck would never really stop anywhere.

It's interesting that you bring this point up though, as I think that many more out there might be thinking along the same lines as yourself. It would go a long way in explaining the new Irish's taste for high risk strategies. That and maybe the fact that we've been on an upward trend in the cycle for the last 10 years or so!


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## Afuera

*Re: Sean Dunne, Dunne-for?*



StoppedClock said:


> I think this loan is no longer on Ulster Bank / RBS books but has been sold on to US Investors.


 
Yes, I heard something along those lines as well. I think that it was passed off the books very quickly in the form of derivatives. Nobody wanted to be holding that hot potato! Who actually owns those derivatives now is anyones guess.


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## baby_tooth

*Re: Sean Dunne, Dunne-for?*



Afuera said:


> What do you reckon the government could do to bail him out should it all go pear-shaped? Will they end up buying all of those luxury apartments, and turn them into corporation homes so they can create a new ghetto in that leafy part of D4?
> 
> I think if the government jumped in to safe a businessman that made a bad descision, the general public would go ballistic. I certainly wouldn't like to see my hard earned taxes spent in this manner! I'm guessing also that recent EU regulations on government intervention in companies would prevent them from jumping in to safe the banks if they run into difficulty.
> 
> IMHO this hyper-optimistic idea that everything will be alright in the end and the government will pick up the tab for any bad moves that people and companies make is quite damaging. If everyone thought like that then it essentially removes any personal resonibility and the buck would never really stop anywhere.
> 
> It's interesting that you bring this point up though, as I think that many more out there might be thinking along the same lines as yourself. It would go a long way in explaining the new Irish's taste for high risk strategies. That and maybe the fact that we've been on an upward trend in the cycle for the last 10 years or so!


 

your on about "moral hazard"....a fancy way for someone else to worry about your choices.

Have to say, that as much as I hate AIB, they were left with very little choice over the ICI debacle. They could have walked away and let ICI drag the central bank down, which is when the gov would have to jump in, or come clean and say that ICI's liabilites where too massive and that if they were to honour them they would fail.
Either way, the government had to set in to prop up confidence in the market.

Sean Dunne won't be bailed out. He may lose his shirt, but this is still tiny money in todays terms. RBOS balance sheet can easily take this knock..


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## baby_tooth

*Re: Sean Dunne, Dunne-for?*



Afuera said:


> Yes, I heard something along those lines as well. I think that it was passed off the books very quickly in the form of derivatives. Nobody wanted to be holding that hot potato! Who actually owns those derivatives now is anyones guess.


not sure how you could package these as derivatives, more likely locked in acs with alot of cover...

any ideas on how??


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## Raskolnikov

*Re: Sean Dunne, Dunne-for?*



daltonr said:


> Did I read that correctly, we could end up with a situation where Ulster Bank owns AIB Bankcentre?
> 
> From what you're saying above all the contruction going on at AIB would be for nothing, it's all going to be torn down almost as soon as it's complete.
> 
> I can't see how that would make sense. If that was the plan then surely they'd have stopped all development by now? Or perhaps they have, I haven't been around in a while.
> 
> -Rd


From what I know, there's no construction going on at the AIB headquaters in Ballsbridge. In four years time when their lease expires, the building will be torn down to makeway for a development along the lines. AIB will have to find a new home.


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## Remix

Borrowers and lenders who enter into these huge "hope the trend continues" deals must do so knowing they protected.

Or I suppose they could be fools. You can't rule that out.

Personally I think a high profile failure would come with a silver lining.

Might help your kamikaze-leaning irish specuvestor pay more attention to the "risk profile" of their favourite investment.


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## daltonr

> From what I know, there's no construction going on at the AIB headquaters in Ballsbridge


 
There was until very recently, if it's finished then it's only just finished. I've been away for a while, so I don't know where it's at. I don't think It was a secret, the construction could be seen from Serpentine Ave.

Whatever other aspects there are to this story, I'd be amazed if AIB are leaving Bankcentre any time soon.
But money is money and if it makes financial sense then...

-Rd


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## liteweight

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

Construction work is still being carried out at AIB centre and will be for another year or more. As far as I was aware AIB have a 30 year lease. It's highly unlikely that this will be pulled down in 5 years...more than likely won't be finished until then!


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## rmelly

5 years for the AIB lease is not correct - the lease is at least 25/30 years.

I'm sick of reading newspaper/magazine articles where they have something like this that is clearly wrong, which causes me to doubt the entire contents of the article and wish I hadn't started reading it. I especially hate where they get their figures wrong, eg. million instead of billion or vice versa. And then of course there are the typos, particularly in the so called 'paper of record'.


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## darag

You're both right as far as I know.  The Ballsbridge site was actually split into three separate lots - Dunne only bought the front bit (mostly grass but with 2 or 3 of the blocks in the current complex).  This bit has a much shorter lease than the other parts.  He has the option to terminate the lease in 4 or 5 years - presumably he will exercise this.  AIB will remain at the site but will confine themselves to the new building (nearly finished at the back) which they are leasing from a consortium of private investors on a long term basis (25 years at least).  Presumably the middle section (the bulk of the existing office complex) will be redeveloped in the medium term.


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## pjbrady1

It will be a multi million euro losing deal if he can only get permission for 8 stories. However from the papers it appears there are alot of different investors exposed to this deal. I doubt permission will be granted for a 32 story building. 
I could see a few developments go pear shaped in 2007/2008. Big money has been paid for sites and expensive apartments and houses are the ones that have fell the most in the last three months.


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## johndoe64

Plans scrapped for 32-storey tower in Dublin
15/05/2007 - 09:23:49 
Hopes for a 32-storey skyscraper with over 600 apartments for Dublin city have been dashed.

Property tycoon Sean Dunne was hoping to build the development on the site of Jury's Hotel in Ballsbridge.

http://www.breakingnews.ie/ireland/?jp=MHKFAUGBGBSN

But last night Dublin City Council withdrew the plan and instead opted for another plan limiting tall buildings in the area to eight storeys.


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## almo

I thought I read at the time that he bought the land contingent on it having prior agreement to develop 20+ floors?  Surely he wouldn't have stuck such a fortune intot he plan without there being some sort of guarantee, or am I totally brain damaged at this point?


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## setemupjoe

Maybe he might put a traveller halting site in the area to spite the planners if he doesnt get his way ! REMEMBER HEARING OF A SIMILAR SITUATION ON THE SUTTON CASTLE SITE ,ALL OBJECTIONS WERE DROPPED OVERNIGHT WHEN AN ASYLUM SEEKERS ACOMMODATION  APLICATION WAS PURSUED AFTER BEING REFUSED PERMISSION !


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## Trudee

Think that's the whole point of the residents objections, it would seem that Dublin City Co. by coming up with a draft local area plan for Ballsbridge without mentioning rezoning anywhere are thereby facilitating  all the developers who bought huge sites in the area, think of the development levys they'd make!  The South East Area Councillors voted to reject the local area plan and the rezoning and instead stick with the current Dublin Development Plan.  Dublin City Council put the draft local area plan out for public consultation at beginning of February but only put the notice out for rezoning at end of April, seemingly you'd need the rezoning before the local area plan.


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## Trudee

Should also have mentioned that it's not just Jurys and Berkeley Court sites that would be looking for development by Sean Dunne, he also owns the AIB old HQ, the green space opposite RDS plus four of the old AIB buildings behind this green space, don't know who owns vet college but that's also a huge site.


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## Afuera

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



yddaphslaw said:


> I was listening to Sean Dunne being interviewed by Marian Finucane on Sat. last Mar 16th 2008. I have to admire this guy.


I suppose it's hard not to admire someone who is so "spectacularly unsuccessful". He exhibits at least 5 of the 7 mentioned habits here (links to pdf):
[broken link removed]


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## Glenbhoy

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



Afuera said:


> I suppose it's hard not to admire someone who is so "spectacularly unsuccessful". He exhibits at least 5 of the 7 mentioned habits here (links to pdf):
> [broken link removed]


Which 2 do you reckon he doesn't exhibit?


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## Afuera

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



Glenbhoy said:


> Which 2 do you reckon he doesn't exhibit?


Not knowing the guy personally, I couldn't really say whether he displays the traits from #3 or #4. This gossip style article on him from about a year ago though suggests he could be on for getting a full 7 out of 7:
http://www.tribune.ie/2006/11/12/79074.html


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## tallpaul04

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

why do people always have to knock people? who cares what kind of person Sean Dunne is, let him get on with it and wish him all the best, i'd love to have his kind of money to through at a project like that.

and remember poor planning and the lack of tall buildings has forced people to park their cars for a couple of hours everyday on the embrassing M50 we should have has sky scrapers years ago.


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## rmelly

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

There was an article on him in one of the weekend papers a few weeks ago (Irish Times or SBP or Sunday Times), which said he was one of the better placed developers financially speaking. He sold a number of properties (and a shopping centre) at or near the peak to amass a 'war chest' of €300m plus. He has also said he could afford to develop what he currently has permission for in Ballsbridge, leave the remaining site (without permission) empty and break even or close to it.


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## Afuera

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



tallpaul04 said:


> why do people always have to knock people? who cares what kind of person Sean Dunne is, let him get on with it and wish him all the best, i'd love to have his kind of money to through at a project like that.


Not looking to knock him. Merely posted the link to that article as it may provide an insight into how Sean Dunne has found himself in the situation he currently is in. When I first read the article on being "spectacularly unsuccessful" (i.e. a highly public failure), he was the first person that popped into my head, but if you don't see the correlation then fair enough.



tallpaul04 said:


> and remember poor planning and the lack of tall buildings has forced people to park their cars for a couple of hours everyday on the embrassing M50 we should have has sky scrapers years ago.


I agree poor planning is a big problem in Dublin and higher density building should be welcomed. However, there are probably much better places to locate this higher density housing. Many other locations, close to the city centre, are really crying out for regeneration while the locals in Ballsbridge seem to be pretty happy with the status quo there.


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## joe sod

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

"I agree poor planning is a big problem in Dublin and higher density building should be welcomed. However, there are probably much better places to locate this higher density housing. Many other locations, close to the city centre, are really crying out for regeneration while the locals in Ballsbridge seem to be pretty happy with the status quo there. "

I agree with this , Dunne isn't really interested in high density living, all he was interested in was generating as much income as possible from a desirable address, the higher the buildings the more money it generates, it is another example of developer lead development rather than proper planning, why dont dublin city council bring out a pla for dublins development for the next 20 years, detailing the population they expect within dublin city and where that population should be located, undoubtedly if they had a serious plan, then some low density areas would have to be demolished to make way for this high density, but that would be too radical for politicians


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## room305

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



Afuera said:


> Many other locations, close to the city centre, are really crying out for regeneration while the locals in Ballsbridge seem to be pretty happy with the status quo there.


 
But are there builders chomping at the bit to develop in these areas with no government subsidy? Most of these regeneration plans seem to be designed to enrich developers enormously at the expense of the taxpayer but for dubious longterm benefit.

I say let Dunne's plan go ahead and it will serve as a model for other high rise developments in the city's less salubrious areas, possibly severing the linking of poverty and high density living in the Irish mindset for once and for all.


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## sparkeee

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

he only has a lend of the shirt on his back,he keeps his own shirt safe and sound,offshore.


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## joe sod

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



room305 said:


> But are there builders chomping at the bit to develop in these areas with no government subsidy? Most of these regeneration plans seem to be designed to enrich developers enormously at the expense of the taxpayer but for dubious longterm benefit.
> 
> I say let Dunne's plan go ahead and it will serve as a model for other high rise developments in the city's less salubrious areas, possibly severing the linking of poverty and high density living in the Irish mindset for once and for all.


 
yes thats actually a very good point, if dunnes project were allowed go ahead it could revolutionise the development of dublin and the rest of the country for that matter away from suburban sprawl


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## tiger

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

[broken link removed] sounds like a potentially similar situation.





> Irish Life's High Court case yesterday against Galway developer John Lally could signal a bad patch ahead for many developers. The rumour mill has been working overtime for months because of the heavy borrowings of by a range of developers, and the sudden cut off of finance by banks already heavily exposed on property.


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## Afuera

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

Seems like Sean might be starting to face up to the reality of the situation facing him...

http://www.nytimes.com/2009/01/04/business/worldbusiness/04ireland.html?_r=2&pagewanted=1&hp



> “The Celtic Tiger may be dead and if the banking crisis continues I could be considered insolvent. But the one thing that I have is my wife and children — that they can’t take away from me.”


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## Brendan Burgess

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

That's a really interesting article. Well worth reading.


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## ClubMan

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

Is _Sean Dunne _a giant or is his wife a dwarf or something?


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## Simeon

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

Clubman, could you be the The Great Leveller's alter ego? 
 I don't thnk Sean Dunne wil go hungry. Most of these fellows will have a wedge ring-fenced.


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## Lightning

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



Brendan said:


> That's a really interesting article. Well worth reading.



Yeah really good article. 

One wonders if reality has really dawned on Mr. Dunne when he says he is willing to take bets with anyone who says that the Ballsbridge development won't go ahead ...


> "If anyone wants to bet I can’t do this, I will take that bet,”



In any case we will know more on January 30th.


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## Raskolnikov

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



fungus said:


> In any case we will know more on January 30th.


What happens then?


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## ClubMan

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

_An Bord Pleanála _will rule on the _Ballsbridge _development.


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## Bronte

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

I sent my other half the articles on Sean Dunne yesterday and our correspondance went like this

Me: What do you think of this?
Him: Arrogance over reality will bring him down
Me: Do you think he's arrogent, sounds like despair to me?
Him: More like a gambler chasing his money

This thread is interesting going back to 2006 and the views then. Even if he gets the planning how is he going to fund it not amind sell the apartments when there is no market.........
But it does remind me of a certain beef baron who owed the bank so much money that they couldn't and didn't let him fail and he's once again top of the heap. We had tribunals or somesuch about that too. Time will tell. 

I've since been sent the odds (bookie odds) on when the property price index will go up and at 15 - 8 for 2012 Sean Dunne could be spot on.


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## mercman

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



Bronte said:


> I've since been sent the odds (bookie odds) on when the property price index will go up and at 15 - 8 for 2012 Sean Dunne could be spot on.



But notwithstanding the matters of the Planning Appeal, will the Bank that has funded the purchase, hang about or simply take the outcome of the decision of An Bord Planala, and sell the property on, absorbing the loss and put this experience down to another bad decision. Knowing the particular lenders in question I would put money on Mr.D becoming a historical piece of Pub Talk.


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## Bronte

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

They don't seem to be very quick on closing down on developers.  Rolling over debt etc.  If he owes them too much it might not make sense to sell.  In any case can it be sold?  Are there buyers out there with cash or banks to fund them?


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## mercman

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*



Bronte said:


> In any case can it be sold?  Are there buyers out there with cash or banks to fund them?



The Bank in question should soon make him move to one side and take over the operation. Whilst not privy to the Inner detail, the Bank has to hold the ultimate decision on moving forward. Forward in this case will probably offloading the entire or alternatively a JV with others institutions to assemble a project on their terms on a lower profile for a development suitable to the area and pleasing to those that objected.


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## Brendan Burgess

*Re: Sean Dunne:AIB deal: Can anyone see him getting out of this without losing his sh*

This thread is now continued here given that An Bord Pleanala has refused permission.

Brendan


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