High-flyers may land in Nama
SIMON CARSWELL, GRETCHEN FRIEMANNand SUZANNE LYNCHlook at some of the names who may shortly become the next clients of Nama
HAVING PURCHASED the loans of the 10 most indebted property developers, the National Asset Management Agency (Nama) has turned its attention to the next layer down.
The five institutions participating in the Government’s asset-recovery agency are working to transfer €13 billion in land, development and associated loans from the middle of this month.
This will be on top of the €15.3 billion that moved across to the agency in the first wave.
State-owned Anglo Irish Bank will transfer about €7.3 billion worth of toxic property loans to Nama in the second wave of transfers – representing the largest amount being sold by one institution in this tranche.
This compares with €2.8 billion from AIB, the next largest participant in the second wave.
Some €8.5 billion in loans will move across to Nama in the third tranche by mid-summer.
Nama aims to purchase almost half of the targeted €81 billion in loans from the financial institutions by the end of July.
The agency does not disclose the identity of its newly acquired clients, but a number of developers are seen as candidates in the coming tranches given the scale of their operations.
Negotiations between Nama, the banks and the borrowers over the coming weeks will determine whether they join the growing club who have swopped their bank manager for the State.
Even solvent developers who are servicing their loans will eventually end up in Nama if they have loans of more than €5 million with any of the five participating institutions.
Transfer into Nama is based on the scale of loans and is not a reflection of ability to repay the outstanding debt.
Many Nama-bound borrowers do not yet know whether they will be transferred this time or in later waves, though the financial institutions are working with valuers and lawyers to transfer about 20 borrowers earmarked to move in the second tranche.
Some of the developers below may be among them and will shortly discover whether they are answerable to the State agency.
IN 2005, Mr Dunne forked out €53.7 million an acre for the Jurys site in Dublin 4, although the loans on the €370 million deal were provided by Ulster Bank, which is not involved in Nama.
The so-called “Squire of Ballsbridge” owns other properties in Dublin, including the front blocks of the AIB Bankcentre, which he bought for €207 million in 2006.
Dunne also owns the empty Bloodstone building in the south Dublin docklands and land in the North Lotts area adjoining developer Liam Carroll’s site, which had been earmarked as a head office for Anglo Irish Bank.
Dunne’s company Mountbrook has substantial loans with Bank of Ireland and Irish Nationwide Building Society, both of which are participating in Nama.
PADDY KELLY, one of the most flamboyant members of the Celtic Tiger-era property elite, told The Irish Times he was led to believe his personal guarantees to Anglo Irish Bank, to which he owes substantial borrowings, would “never be called in” but were a “merely a means of retaining loyalty”.
The developer, whose stake in the Pragelato ski village near Turin in Italy is now controlled by the nationalised bank, describes himself as “broke beyond broke”.
He has lashed out at the Irish banking sector, saying those people who had “pursued him for business for years” were now unable to treat him and his family with “basic human decency”.
He maintains that no one could have “predicted” a catastrophic “50 to 90 per cent slump in property prices” and argues that any developer with gearing “over 50 per cent is broke”.
He also volunteered to “work for free” on large-scale sites such as the €2 billion Bray town centre scheme, which is thought to be earmarked for Nama, to ensure taxpayers “receive a return for their money”.
Although he expects to be included in the next tranche of loan transfers, he fears the State agency intends to “blacklist” him from any further involvement on the large-scale projects in which he has a stake and has argued that there is a danger Nama could become “politicised”.
THE €260 MILLION Jurys hotel deal fixed Sean Dunne as a household name but the record property values achieved were eclipsed three weeks later by Ray Grehan’s Ballsbridge landgrab.
Having established his reputation as a heavy-hitter nine months earlier with the €85 million purchase of the Grange site in Stillorgan, Grehan upped the stakes in the D4 property game by splashing out €171.5 million – €84 million an acre – for the UCD veterinary college building on Shelbourne Road. It is understood most of the bank borrowings on the deal were provided by AIB.
Dublin City Council subsequently refused Grehan permission to construct a 15-storey tower on the site. He now faces legal action from the local authority for running an unauthorised car park there.
Similar setbacks have bedevilled his high-profile residential and retail project in Howth.
In addition to his landbanks across Dublin, Grehan is heavily invested in development projects in central London, with multiple sites in the Canary Wharf area and a 4.2 acre residential development in west Ealing.
NIALL MELLON started in property and financial services with the Niall J Mellon Group while in his 20s.
He has extensive property interests in Ireland and Britain.
Among the more high-profile purchases made by his company, Knockrabo Developments, was the €50 million purchase of the Bank of Ireland playing fields in Goatstown in 2003. A protracted planning application process ensued.
In 2002, at the age of 35, he became involved in charity work, with a focus on South Africa. He established the Niall Mellon Township Trust, which quickly grew to become a major supplier of subsidised housing in South Africa.
He has been recognised internationally for his work in South Africa, garnering praise from Nelson Mandela and Desmond Tutu.
In March this year, Mellon told The Irish Times that he had used all his personal funds to pay off “almost all” of his business debts over the past two years, after it emerged that a judgment of more than £300,000 (€360,000) had been registered against him by contracts for difference service supplier IG Markets in London.
PADDY SHOVLIN is another member of the property development fraternity with strong connections to the former tax adviser Derek Quinlan.
In 2006, Mr Shovlin and Quinlan Private – renamed Avestus following Mr Quinlan’s resignation from the firm – paid €200 million for Bank of Ireland’s headquarters on Baggot Street.
Its value is thought to have considerably declined since its purchase.
The investment partnership between the two businessmen was repeated on the Beacon South Quarter project in Sandyford.
In July 2006, Quinlan Private snapped up a 50 per cent stake in the office and retail scheme, which was developed by Mr Shovlin’s firm Landmark Developments, for €75 million.
Mr Shovlin is also a member of the consortium that developed the Beacon Private Hospital, in which he retains a shareholding.
BOVALE DEVELOPMENTS, the property group owned by brothers Tom and Michael Bailey, is one of the largest landowners in the State.
Tom Bailey said this week he could not comment on whether Bovale’s loans would move to Nama.
As an unlimited company, information on Bovale’s financial position is not available. Last November, the brothers defied the recession, announcing plans to spend €135 million expanding the company’s Charlestown shopping centre in Finglas. They said this would lead to 890 new jobs.
About 500 jobs were expected to be created during the building phase.
In 2006, the company made a record settlement of €22.17 million with the Revenue Commissioners, including interest and penalties of almost €9.7 million, in a case arising from the planning tribunal.
TALLAGHT SQUARE developer Noel Smyth is seen as a possible candidate for Nama. The wealthy solicitor, who controls British and Irish property development company Alburn Investments, maintains a substantial property portfolio, including office blocks in Sandyford Industrial Estate.
He was one of the original investors in the Square shopping centre, along with builder Ken Rohan and Derek Quinlan’s Quinlan Private – now known as Avestus following Quinlan’s resignation from the firm. The property syndicate offloaded its units to Smyth for €320 million in 2007. Smyth declined to comment this week on when he expected his loans to transfer.
Harcourt Developments Pat Doherty
THE PROPERTY interests of Harcourt Developments span the globe, with developments in Britain, Europe, the US and the Caribbean. In recent weeks the firm, controlled by Donegal businessman Pat Doherty, hit the headlines after it issued writs against 12 customers who failed to complete the purchase of apartments in Belfast’s Titanic Quarter (above).
Harcourt’s subsidiary, Titanic Quarter Ltd, is overseeing the multibillion-euro regeneration project, the largest of its kind in Europe, and recently informed Northern Ireland’s High Court it may seek damages if the allegedly cash-strapped buyers refused to complete the purchases.
Harcourt is also understood to be servicing its borrowings.
DAVID COURTNEY, a director of estate agency Spain Courtney Doyle, and Jerry O’Reilly, a developer from Co Kerry, both have longstanding business connections with property developer Bernard McNamara.
All three are part of the consortium that purchased the Shelbourne hotel for €140 million in 2004. The investors, including John Sweeney, whose stake in the business has been seized by Anglo Irish Bank, then ploughed an additional €125 million into the landmark property in extension and refurbishment costs.
The trio are also behind the €400 million Elm Park development on Dublin’s Merrion Road and were part of a group which bought Superquinn for €450 million in 2005.
Records filed at the Registry of Deeds show Courtney has followed two of the top 10 Nama developers, Liam Carroll and Gerry Gannon, in transferring ownership of the marital home into his wife’s name.
Tom Considine, Paddy Sweeney
TOM CONSIDINE and Paddy Sweeney are the developers behind the Millennium Park development – now known as Osberstown – outside Naas in Co Kildare.
Along with Gerry Prendergast, they paid a record price for the land when they bought the 331-acre Millennium Park and adjoining lands in 2006 for €315 million.
Sweeney did not know whether the consortium’s loans would be transferred to Nama this month, in July or in August, but he acknowledged that they would be moved. Valuations are being carried out in preparation for the transfers, he said.
Last year, financial statements submitted to the High Court showed that Considine owed €275 million out of total bank debts of €615 million of partnerships in which he was involved. The majority of the debts of Considine’s partnerships, which have completed a number of property transactions, involve fellow investors Prendergast and Sweeney.
The statements were submitted in an action taken by Dermot O’Rourke against Considine, Prendergast and Sweeney for €21 million for failing to make repayments on a €10 million loan he had given them.
CASTLELANDS CONSTRUCTION, set up in Mallow, Co Cork, by John Barry in 1988, is one of the largest property developers in Munster.
A significant borrower with AIB, Anglo Irish Bank and Bank of Ireland, Castlelands started off in business with the development of 160 acres in Mallow.
The firm has developed projects in Cork city and Midleton, Co Cork, in Kilkenny and in London, undertaking a 27- storey apartment development in the docklands area of London.
According to the company’s website, Castlelands employed more than 500 staff at its peak and built about 700 houses a year.
DAVID ARNOLD is a principal in property investment firm D2 Private, but it is his private investments – including membership of the Nollaig Partnership, a group of 20 investors who were assembled by Derek Quinlan to develop the luxury Four Seasons Hotel in Ballsbridge – that may or may not see him become a client of Nama.
Arnold was also a shareholder in the Liffey Partnership, which was behind a €70 million office and car-park development in Dublin’s docklands.
The 1997 deal attracted media attention last year when it emerged that Lar Bradshaw, the former boss of the Dublin Docklands Development Authority and an Anglo Irish Bank director, had a stake in the scheme.
Quinlan was also a member of the partnership.
Among Arnold’s many property interests is the large-scale office block, One Warrington Place, in Dublin 2, which was rented to a division of Bord Gáis recently.
Alison Rohan, the daughter of veteran builder Ken Rohan and a former employee of D2 Private, recently joined Nama as a portfolio manager.
NOW OR LATER? MORE DEVELOPERS WHICH MAY FEATURE IN THE SECOND OR LATER TRANSFERS TO NAMA
Séamus Ross is the principal behind this company, which has built more than 20,000 properties since it was set up 30 years ago, including large housing estates in Lucan, Blanchardstown and Kinsealy in Co Dublin.
Ross has diversified into hotels and Menolly’s properties include the Dunboyne Castle Hotel in Co Meath and the Dylan Hotel in Dublin city centre.
David Daly’s firm is one of the best-known Dublin housebuilders. As well as its residential property interests, the firm owns major investment properties in the city.
Run by the businessman David Agar, the company is behind the Beacon Quarter development, the Harcourt Building and Westland Park. In terms of residential property, the company has invested in exclusive properties in Foxrock.
One of the largest developers of apartments in the UK, this firm has significant loans with Irish Nationwide Building Society.
Tom McFeely and Larry O’Mahony
A former IRA hunger striker, Tom McFeely, and his business partner, Larry O’Mahony, have developed properties in Dublin.
They are being sued by solicitor-turned-developer Noel Smyth over a property deal at the Square shopping centre in Tallaght.
They are also significant borrowers with Irish Nationwide.
A regular partner with developer Paddy Kelly in deals, John Flynn is involved in a consortium that planned to build a large shopping centre in Bray, Co Wicklow.
The chief asset of the firm, which is owned by Michael Cotter, is the Park, a €450 million retail, office and residential development in Carrickmines, Co Dublin. The group is understood to be servicing its debts.
Maybourne Hotel Group
Businessman and property investor Paddy McKillen is a shareholder with Derek Quinlan in the London hotels – the five-star Connaught, Claridge’s and the Berkeley hotels – which operate as the Maybourne Hotel Group.
The group is close to finalising the refinancing of its Irish bank loans with foreign banks, which would prevent the transfer of its bank debts to Nama.
“We have been talking to a number of banks outside Ireland on refinancing the loans for the Maybourne Hotel Group,” said a spokeswoman for the group.
“These talks have been very successful and interest from the banks is oversubscribed. All Irish banks will be repaid in full once the refinancing is in place and this is expected shortly.”