From modest beginnings to mega-deals
ANALYSIS:Derek Quinlan’s departure marks a significant milestone in the Irish property sector, writes SIMON CARSWELL
THE DEPARTURE of property financier Derek Quinlan from the investment firm he founded 20 years ago marks a significant milestone in the Irish property sector.
Quinlan has grown Quinlan Private from modest beginnings as a tax consultancy offering advice into a property investment firm based in Ballsbridge, with some of the wealthiest names in Ireland and Britain on his files and over €10 billion in assets under management. The firm rose to attention in 2000 when it emerged Quinlan was behind a group of investors, among them former attorney general Dermot Gleeson, bankrolling the development of the Four Seasons Hotel in Ballsbridge.
International recognition came four years later with the acquisition of the landmark Savoy and its associated London hotels for €1.1 billion for investors who included Riverdance producers John McColgan and Moya Doherty.
Outbidding a Saudi billionaire prince for the trophy hotel group marked Quinlan’s arrival and heralded a flood of cash-rich Irish investors, flush with substantial bank borrowings, as major players in the UK property sector.
Quinlan’s appetite for deals continued unabated. The acquisition of budget hotel chain Jurys Inns for €1.165 billion in 2007 marked the pinnacle of transactions of the recent Irish property boom.
Such was the firm’s confidence that the deal was completed without investors standing by to provide the full €400 million in equity. Bridging finance from Anglo Irish Bank allowed the firm the time to find investors.
An investment of €200 million by the Middle Eastern sovereign wealth fund of oil state Oman showed how far Quinlan’s growing international contacts stretched.
The global banking crisis and the evaporation of easy credit over the past 18 months has led to plummeting values across the property markets, refocusing Quinlan’s business from a frenzy of new deals to the drudgery of intense renegotiations with banks on existing loans.
Quinlan’s strength and interest was in developing contacts with investors, seeking out fresh opportunities and brokering deals rather than on debt restructuring.
Declining property values has forced bankers to Quinlan Private and Quinlan personally to seek additional cash relative to the debt owing on property transactions.
It was reported last weekend that Quinlan Private was in talks with a group of banks to inject a further €17 million in equity into a joint venture with the Israeli Igal Ahouvi Group, which bought the Marriott Hotel Group in 2007.
Calls for further equity injections have become the norm for highly-leveraged investors in the beleaguered property sector, as banks try to reduce risk on loans agreed at the height of the market.
Quinlan has withdrawn from the investment firm that bears his name over the past year, spending more time at his homes in London and on the luxurious French Riviera resort of Cap Ferrat, and focusing on his own personal property investments.
He has left the management of the firm and regular negotiations with banks and property agents to his four partners – Olan Cremin, Peter Donnelly, Thomas Dowd and Mark O’Donnell – who will run the firm after his retirement.
The firm will announce today that Quinlan will step down as chairman and partner of Quinlan Private at the end of this month, though he will remain a substantial investor in various deals.
Outside the firm, Quinlan holds substantial stakes in the Madrid headquarters of Spanish bank Santander, acquired with a co-investor for €1.9 billion last year, and the Citigroup tower in Canary Wharf, London, which was bought with the same partner for €1.2 billion in 2007.
He is looking to cash out of a number of investments. He is selling a property on Elgin Road in Ballsbridge; two properties in Manhattan at reduced prices and land in Malibu, California.
He owns three houses on Dublin’s Shrewsbury Road, including his family home and a property on nearby Ailesbury Road, acquired in 2007 for €8.5 million.
- Jurys Inn budget hotel chain – purchased in 2007 for €1.165bn;
- Chain of 47 UK hotels in Marriott hotel group – purchased in 2007 for £1.1bn stg with Israeli partner Igal Ahouvi Group;
- Savoy hotel group (later renamed Maybourne hotel group) – bought in 2004 for €1.1 billion;
- Diagonal Mar shopping centre, Barcelona – purchased in 2006 for €300 million;
- Bank of Ireland headquarters, Dublin city centre – purchased in 2006 for €212 million with a partner;
- Eircom’s new head office opposite Heuston Station in Dublin – purchased for €190 million.
- Co-investor in Madrid head office of Spanish bank Santander – purchased in 2008 for €1.9bn;
- Co-investor in Citigroup tower in Canary Wharf, London – purchased in 2007 for €1.2bn;
- Co-investor in Clarence Hotel, Dublin;
- Property on the French Riviera resort of Cap Ferrat;
- Three houses on Shrewsbury Road in Dublin – two of which were purchased in 2006 for €27m;
- A former embassy on Ailesbury Road in Dublin – bought for €8.5m in 2007
- A property on Elgin Road in Dublin – on the market for €7.5m;
- A 13,000sq-ft townhouse in Manhattan – on the market for €23m;
- Offices on the Upper East Side in New York city – on the market for €19m;
- An investor in five-star London hotels – Connaught, Claridge’s and Berkeley – and Quinlan Private investment transactions.