Political upheaval in Ukraine and the annexation of Crimea by
Russia has significantly affected the value of commercial property in both countries belonging to the State-owned Irish Bank Resolution Corporation, now in liquidation.
However, the company remains in control of the rent-roll from the Ukraina Mall in Kiev and is confident that the rent from the valuable Kutuzoff Tower in Moscow is not “leaking”, according to a source with knowledge of the situation.
The upheaval in the region and its effect on international investment has added to the losses suffered by the IBRC since it began its efforts to seize control of an international property portfolio built up by the businessman Seán Quinn for his children and over which Anglo Irish Bank, since subsumed into the IBRC, had charges. A sizeable proportion of the property is in Russia.
“You can’t blame the Quinns for Russia invading Ukraine, but if it hadn’t been for all the difficulty we would have sold the properties long ago,” said the source.
Jewel in the crown
The mall was at one stage believed to be worth €50 million while the Moscow tower, considered the jewel in the crown of the portfolio, was worth up to $180 million. Other Russian assets may be worth more than that again.
The IBRC, along with Russian partners, has asserted control over the Ukraina’s annual rent-roll, believed to be approximately $10 million.
The Moscow tower is believed to have an annual rent-roll of approximately €15 million and, while control over this has not yet been achieved, the bank believes the local administrator will not allow the money “leak” from the accounts pending the assertion of control.
Already a Fermanagh-based company, Demesne Investments, which was the vehicle through which loans issued by Anglo were channelled to local property companies associated with the portfolio, has recognised losses of €139 million.
Money considered gone
An audit of the company that operates the shopping mall in Kiev has indicated that up to $15 million may have been transferred out of the company's accounts in the 2011 to 2012 period, when IBRC was trying to assert its control. This money is now considered gone.
While the IBRC believed the mall continued to be under the control of the Quinn family for some time after the bank began to assert its legal rights, it is unsure as to whether the family eventually lost control to local players.
Speculation
There was speculation in Kiev last year that people close to the now-departed Ukrainian president Viktor Yanukovych could have seized the building. The bank has now abandoned any effort to establish if this was the case.
The IBRC has done a deal with a Russian asset recovery group, A1, which will share any proceeds from the recovery of any of the former Quinn assets in Ukraine and Russia.
The need to enter into this deal is another factor in the losses accruing to the State on the affair.
