Investors line up legal action over ACC property losses in Amsterdam

Group say they lost-out on €50m upside when forced to sell office investment in Netherlands capital

Canal: Van Diemenstraat 206-380 in Amsterdam

Property: Keizersgracht 119-121, Amsterdam

Canal: Van Diemenstraat 206-380 in Amsterdam

Property: Keizersgracht 119-121, Amsterdam

Canal: Van Diemenstraat 206-380 in Amsterdam

Donal O'Donovan Twitter Email

March 25 2021 02:30 AM

A group of up to 40 Irish farmers and small business owners are lining up behind a potentially major legal action against Rabobank saying they missed out on around €50m when they were forced to sell their investment in prime Amsterdam offices in a 2016 deal that recouped the bank’s loan but left the investors nursing big losses.

The investors poured savings and pensions into the 2008 property scheme as clients of the former ACC Bank’s wealth management arm, but were left with substantial losses and in some cases owing the bank when the fund’s directors – almost all bank employees – forced a sale in 2016.

The buyer, US investor Angelo Gordon ultimately sold the portfolio within four years for €50m more than it paid. One property was “flipped” at a €2.8m profit within weeks, investors will claim in court.

An initial hearing, when witnesses from both sides are expected to give evidence will take place in Amsterdam on April 6.

Rabobank declined to comment.

One property was ‘flipped’ at a €2.8m profit within weeks, investors will claim in court.

The case is being funded by Dutch property investor Heredium Facility, supported by a number of the original Irish investors. Heredium funded an investigation into the facts of the case as well taking on the costs of litigation.

If the action succeeds, proceeds of any settlement will be split between Heredium and the Irish investors. Such litigation financing is an established practice in the Netherlands.

Back in 2008, the Irish ACC bank clients put just over €10m into the scheme, buying €250,000 ‘blocks‘ in a specially created fund, after being approached with the investment opportunity by ACC, whose pitch included all-expenses-paid tours to view the properties.

The investment fund, ACC Dutch Property Fund IBV, was founded by Bouwfonds Investment Management, which like ACC was owned at the time by Rabobank, in January 2008.

ACC provided €31m of debt to buy just over €40m of prime commercial office property in Amsterdam’s prestigious canals district, to be managed by Bouwfonds.

But investor are now set to claim the scheme was doomed from the start. Rents never covered around €2m a year of interest and fees that had to be paid to the Rabobank affiliates.

Rabobank employees made up a majority of directors on the fund’s board.

Without enough income to cover costs, loans increased to almost €40m over eight years.

In 2016, with loans due a decision was made to sell the portfolio for €42m. Investors say they had no say in the sale and that no effort was made to refinance the loans at a time when Amsterdam property was in demand.

The Irish investors were initially left with nothing, but say that following complaints the bank in 2017 made them a settlement of 52 cents in the euro. Investors now say that was roughly equal to what was left from the sale anyway after loans were repaid.

With thousands of Irish investors burned in various boom-era Continental property investments linked to a variety of banks and institutions the case is likely to attract widespread interest.