DEVELOPER and solicitor Noel Smyth has begun a deeply discounted buyback of nearly €230m of bonds linked to his UK property portfolio.

Smyth is offering holders of some bonds issued by his Alburn Real Estate vehicle between 16% and 75% of their face value, according to documents published last week. The bondholders will have to vote on the offer at a special meeting to be held in London next week.

According to a seven-page summary of the proposed transaction seen by the Sunday Tribune, the 45-strong portfolio built up by Alburn includes offices, retail and industrial space let to clients including DHL, BT, Premier Foods and a number of UK government departments and agencies.

The properties were worth €288m in 2007 but an updated valuation of them in April this year put their value at just under €156m, a decline of nearly 53%. The properties are generating rent of about €16.8m, the document shows.

Bonds issued by Alburn have been heavily downgraded by all ratings agencies this year because of the deterioration in the property market. In its downgrade in March, Fitch Ratings said: "A significant part of the portfolio's office component is located in less-established market locations and the biggest retail property is under-performing due to the weak economic environment and overall poor asset quality."

At the meeting in London on 8 November, bondholders will be given a chance to quiz Alburn on the rationale for the buyback, while advisers CBRE will give an outlook for the portfolio's performance over the next couple of years.

Smyth is one of Ireland's best-known property developers. Earlier this year he lost a major High Court challenge for damages against long-time rival Liam Carroll over the redevelopment of The Square shopping centre in Tallaght.

The solicitor was involved in a consortium that offered to donate a site to build the proposed national children's hospital. Smyth told the Sunday Tribune earlier this month that he had not been contacted by health minister Mary Harney or any representatives of the project to discuss his plans for an alternative site since the departure of Philip Lynch from the children's hospital board.

However, he vowed to keep going with his proposals to build the hospital on a site he owns close to the Naas Road, which he claims could be built on a "not- for-profit" basis for €150m less than was planned.