Ireland is postponing the sale of Russian and Ukrainian assets accumulated from the family of the former billionaire Sean Quinn after prices slumped.
Ireland secured the agreement of Alfa Group's A1 trading and investment company, controlled by Russian billionaire Mikhail Fridman, to hold the assets until the economy improves, A1 said in an e-mailed statement to the Bloomberg news agency today.
The holdings are now valued at as much as $120m, down from about $200m in 2013 when A1 and Ireland entered the partnership, A1 said.
The Government wants to recoup investments in real estate assets including a skyscraper in Moscow and a shopping centre in Kiev, properties accumulated by Quinn, once Ireland's richest man.
Russia's conflict with Ukraine, along with high interest rates and a slump in oil prices, have pushed the Russian economy toward its first recession since 2009, while Ukraine output shrank 17% in the first quarter.
"During two years of practical cooperation between the bank and ?1, a serious success was achieved in recognizing the rights to all key real estate assets in both Russia and Ukraine that were illegally withdrawn from the appropriate owners and lenders," Eoin O'Leary, Ireland's ambassador to Russia, said in the statement.
His predecessor, Philip McDonagh, said in 2013 that the recovery of the assets is of "paramount importance" to Ireland.
Under the original deal, A1 was to get 30% from the sale of recovered assets. The revised deal allows A1 to earn future rental income and a payout of 20% from the sale of assets.
Since the joint venture was established in 2013, the rouble and Ukraine's hryvnia have tumbled against foreign currencies and commercial property values have plummeted, Alfa said in the statement.
As a result of the joint venture, Alfa said it had been able to secure control over the Q Park warehouse complex in Kazan, the Kutuzoff office tower in Moscow and the Univermag shopping center in the Ukrainian capital of Kiev.
Alfa failed to sell Q Park, valued at 2.58 billion roubles ($50m), in public auctions in April and December.
"Moscow offices have some liquidity, but depend on debt and regional logistics are challenging," Tim Millard, head of the Russian advisory group at real estate broker Jones Lang LaSalle in Moscow, said in e-mailed comments. "The Kiev market is basically not operating."
The family of Sean Quinn is set to enter mediation in their legal fight to be released from liability for loans of more than €2.3 billion ($2.5 billion), the biggest civil court case linked to Ireland's financial collapse.
Quinn, who was sent to jail for nine weeks in 2012 for contempt of court, said last year his family lost €3.2 billion from 2007 to 2008 as the value of its investment slumped amid the financial crisis.
There are eight remaining unsecured assets, according to the statement.