University of Limerick property purchase ‘significant setbacks’

By Cillian Sherlock, PA

The University of Limerick (UL) failed to obtain a formal valuation of a multi-million euro property it bought at above-market prices, according to an official report that also found other “serious failures to exercise due diligence” by the institution.

The findings follow a series of controversies surrounding the university’s acquisition of property in Limerick city.

In April 2019, UL submitted an application to the Office for Higher Education for capital funding to expand its city centre campus worth €45.2 million.

This amount included an estimated €3 million earmarked for the purchase of land in the Opera House area of ​​Limerick.

However, just three days later, the university approved the purchase of a property in the nearby Honan’s Quay area for €8.3 million.

The Comptroller and Auditor General’s (C&AG) report into the matter found there was “no evidence of any additional benefits” from owning the Honan’s Quay property over the Opera House site that would justify the increased purchase cost.

The C&AG report said: “It is difficult to see how this purchase was cost-effective.”

A retrospective valuation carried out last year showed that UL paid around one-third more than the market value of the property in 2019.

The university has proposed to recognise a loss of three million euros in its financial statements for 2022/2023.

C&AG added: “The University still does not have a clear development and financing plan for the Honan’s Quay property.”

The report also stated that while UL received some valuation advice prior to the purchase, it “did not receive a formal valuation report.”

This was contrary to the Public Expenditure Code.

Despite this, the proposal was presented to the UL governing body as if a valuation report had been obtained.

Elsewhere, C&AG investigated the circumstances surrounding a proposal to establish a student residence at Rhebogue – three kilometres from UL’s main campus.

The report found there had been “significant failures in due diligence” in connection with the development, which was to involve the construction of 20 homes.

The purchase price proposed to the managing body was determined based on the property valuation method based on net rental income.

Although the property was substantially structured as a standard housing estate, the managing body was not provided with information on the method of comparing sales prices for the purpose of valuing the property, which would have resulted in a significantly lower valuation.

The university completed the purchase of the homes in October 2023 for €11.4 million, representing an average purchase price of almost €572,000 per unit.

UL failed to indicate that the purchase would be subject to stamp duty, resulting in additional unforeseen costs of just over €1 million.

C&AG said: “Planning advice from relevant specialists was inconclusive prior to the purchase but the university did not seek clarification from the local authority.

“In December 2023, following completion of the purchase, the University received a warning letter from Limerick City and County Council stating that changing the use of the site to student accommodation without planning permission could constitute unauthorised development.”

A March 2024 appraisal of the Rhebogue property indicates that UL likely paid “significantly more” than it should have, the report said.

UL has proposed to recognise a EUR 5.2 million impairment loss in its financial statements in relation to the investment.

The C&AG report stated: “The university’s system of control and decision-making has not been adequately considered or examined.

“Further investigation by the Government revealed credible evidence that legitimate counter-arguments regarding the acquisition of Rhebogue by appropriate university personnel were dismissed or ignored.”

UL acting vice-chancellor Professor Shane Kilcommins said the university “fully accepts the findings and recommendations” in the report.

In an email to the university community, he said: “I want to assure everyone – staff, students and external stakeholders, as well as our funders through the state – that we will implement these recommendations without delay, integrating them into our broader recovery plan.

“The report’s findings are deeply disappointing and understandably cause anger and resentment among our community.

“These events should never have happened and the university has paid a high price for them, both financially, through the losses to its accounts resulting from both transactions, and in terms of its reputation.

“The problems surrounding the purchase of the city centre campus have cast a long shadow over UL’s reputation.”

He added: “The institution recognises the damage that has been done: to the reputation of the university, the trust that the public has placed in us, and the morale of UL staff and students.

“I deeply regret that this happened.”

Professor Kilcommins said “a lot of corrective action” had already been taken but admitted there were no “quick fixes to regain trust”, adding that achieving accountability would take time.