The Portuguese property company owned by Dublin-based solicitor Michael Lynn received loan approval of €26.7 million from Portugal's largest publicly quoted bank in July for a property development on the Algarve. Simon Carswell, Finance Correspondent, reports.
Kendar Portugal received the approval from Millennium BCP on July 25th last, according to Portuguese land registry documents. The records show that the loans had been approved for a large site next to Kendar's existing development in the Algarve village of Cabanas, east of Faro.
Kendar was building about 280 apartments and 10 houses at Costa de Cabanas in three phases. Seventy-six apartments were built in the first phase, most of which were sold to Irish investors. It was planning to build another 210 apartments and 10 houses in the second and third phases. It is thought that loans from Millennium BCP would be used to fund the final two phases, though it is not clear how much money, if any, has been drawn down as construction has not started on the two phases.
A contract, seen by The Irish Times, shows that six Irish investors agreed to pay Kendar Portugal €386,000 for a three-bedroom apartment in the second phase at Cabanas. Kendar planned to complete phase two in the second half of 2009.
A spokesman for Millennium BCP declined to say if Kendar had drawn down any loans. He said the bank was "obligated by law to maintain confidentiality as pertains to its relationships with its clients".
Mr Lynn owes at least €70 million to more than 10 Irish financial institutions, which are suing him in the High Court to recover their loans. His Dublin legal practice was closed by the Law Society on October 15th after it found he had used his client account for personal transactions.
He had continued practising as a solicitor in recent years while running Kendar Holdings, which has also been developing property in Bulgaria, Hungary and Slovakia.
Mr Lynn's wife, Brid Murphy, has said in an affidavit that documents from Bank of Scotland (Ireland) suggested it knew when issuing a loan of €3.85 million to herself and her husband to buy a house in Howth, that the money would be used in whole or part for Mr Lynn's building business in Portugal.
Kendar Portugal sold apartments worth €12.1 million at an average of €204,000 each in the first phase, according to a company statement included in papers filed in court by one of Mr Lynn's Irish lenders.
The company predicted that the remaining units were worth €2.4 million and that it would make a profit of €2.958 million from the first phase. This was based on construction and operational costs of €11.65 million.
Mr Lynn first bought land at Cabanas in 2003 with three Portuguese investors. He later parted company with the investors and bought two more larger plots at Cabanas, in 2005 and 2006, for the second and third phases
A group of Irish investors has hired a Portuguese lawyer to examine whether they can recover deposits paid to Kendar for apartments at Cabanas.
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)