QUINLAN PRIVATE, the exclusive investment firm that epitomised the property boom, is asking clients to put up extra cash because of falls in the value of the properties in which they have invested.
The Ballsbridge-based firm – which this week announced its was parting ways with its founder Derek Quinlan – has identified five deals out of a total of 120 involving 150 client syndicates which require additional capital, according to sources.
Each deal is backed by one or more investor syndicates – in many cases made up of wealthy Irish professionals – who are now being asked to put in about 10 per cent of their original stake.
The deals include the €1.6 billion purchase of Marriott Group’s 47 British hotels in April 2007 and the €1.17 billion purchase of the Jurys Inn hotel group in June 2007.
Sources close to the company said last night that cash calls had already been made in three out of the five cases. In two of these cases the value of the underlying properties had fallen to a level where the fund broke its banking agreements or covenants.
Quinlan Private has also identified another two deals in which the values of the underlying properties have reached a level where there could be a technical breach of banking covenants.
If more cash is not put up in these situations, banks can seize property, wiping out the investors. However, with values falling across the market, banks are inclined to seek an accommodation with investors as long as the rent roll from the property covers the interest on the loan.
Sources close to Quinlan Private say that the cash calls made to date have been successful and the partners in the firm – Olan Cremin, Peter Donnelly, Thomas Dowd and Mark O’Donnell, who invest alongside the clients – have participated. Sources added that the group has also agreed “favourable” ongoing terms with the banks as part of the process.
The company does not anticipate problems at any of its other funds, having “stress-tested” them, said sources last night. Quinlan Private announced this week that Derek Quinlan, who founded the firm 20 years ago, will step down as chairman at the end of the month.
Mr Quinlan has a substantial property portfolio in his own right including 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. Mr Quinlan is selling a number of properties in London, Dublin, Manhattan and Malibu, California, in order to inject more capital into his other projects.
High-level business sources unconnected to the company, say a large Irish bank recently reviewed the title it holds on several personal investmetns it financed for Mr Quinlan.