No formal valuation of Jurys Inns since 2007 deal, says Quinlan Private

THERE HAS been no formal valuation of the Jurys Inns hotel chain completed since it was bought for €1.166 billion in 2007 in one of the biggest deals of the property boom, the firm behind the group said in a recent investor update.

Quinlan Private, which has been renamed Avestus Capital, told former Anglo Irish Bank chairman Sean FitzPatrick, an investor in the deal, last March that his €1.094 million investment would bring a future return of €810,000 by 2015, but this was based on no expansion of the hotel chain.

The firm, which was set up by financier Derek Quinlan, told Mr FitzPatrick that there had been “no formal valuation completed since acquisition” and that a presentation to investors in June 2009 highlighted a projected business plan valuation on an exit in 2015.

The hotel group said last February that it had shelved plans to expand into central and eastern Europe until there was economic recovery in the region, but it was continuing to expand into the UK.

Some £60 million in cash was injected into the hotel chain last year and its debt was restructured.

The details were disclosed to Mr FitzPatrick by the firm as he prepared an assessment of his assets and liabilities for his failed attempt to secure bankruptcy protection in the High Court. He was declared bankrupt by the court last week.

The Quinlan Private document was contained in a report on his finances by Co Kerry accountants O’Connor, Kelliher Treacy.

The property firm told Mr FitzPatrick its investment in the Maximilianhofe shopping centre in Munich – purchased in February 2007 for €270 million – had been valued at €255.5 million by estate agents CBRE in January 2010.

The firm estimated a future equity return based on an exit valuation of €278 million in 2014.

“There is a possibility that a capital injection will be required for this investment in 2010 but the extent of any such potential capital call has not yet been determined,” the firm told Mr FitzPatrick. It estimated his expected return at €1.5 million, the sum he invested.

Quinlan Private said the Four Seasons hotel in Prague was valued by auctioneers Jones Lang LaSalle at €75 million in October 2009. The hotel would be worth €98 million in 2014 if normal trading returned, the firm said.

Mr FitzPatrick has already received a return of €878,000 on his original investment of €864,000 in the Czech hotel. The firm expected him to receive a further future return of €810,000.

Quinlan Private said “no recent formal valuation” had been carried out on another investment, Bank of Ireland’s former head office on Baggot Street in Dublin.

The building was bought in 2006 for about €200 million by investors, including Mr FitzPatrick, Mr Quinlan and property developer Paddy Shovlin.

Mr FitzPatrick’s €2 million original equity investment in the transaction was assigned a nil value by Quinlan Private, which told him that a return date on the investment had yet to be confirmed.

Quinlan Private said that “ongoing interest shortfall obligations and recourse obligations under the senior debt facility have not been reflected” in the figure.

Bank of Scotland (Ireland) financed the transaction. The bank took legal action against three investors in the transaction – Mr Shovlin, Patrick FitzPatrick and Anthony FitzPatrick – last year for defaulting on interest payments on the loan on the building.

Bank of Ireland relocated its head office to one of the bank’s existing office buildings on Mespil Road and will fully vacate the three Baggot Street office blocks it occupies by 2013.