IRISH DEVELOPER Paddy McKillen may challenge the sale by the National Asset Management Agency of £800 million worth of loans held on some of London’s best-known hotels bought by Irish investors led by Derek Quinlan at the height of the boom in 2005.
Under the deal announced yesterday, billionaire brothers David and Frederick Barclay, who already own the Ritz Hotel, have paid full value, plus interest, for loans held by Nama on the Maybourne Hotels Group, which owns the Connaught, Claridges and the Berkeley.
Up to yesterday, the Barclays controlled 30 per cent of Maybourne but the deal now sees their shareholding rise to 64 per cent with the acquisition in a separate deal of the stake held by Mr Quinlan. In addition, they are also now the hotels’ biggest creditor, controlling 90 per cent of its loans.
Last night a spokesman for Mr McKillen said he had no intention of selling his 37.5 per cent stake to the Barclays, while it is also understood he is “concerned” about Nama’s decision to sell the debt, particularly since the deal was done without his knowledge.
However, Mr McKillen's situation is complicated by the fact Maybourne's ownership rules mean he would have to give the billionaires – who own the Daily Telegraph– first refusal if he changes his mind.
A legal challenge by Mr McKillen against Nama is predicted by some London property figures.
Last year he challenged the decision to transfer bank loans on his properties to Nama. Eventually, the agency decided not to do so.
Anglo Irish Bank and the Bank of Ireland financed the 2005 takeover by the Irish syndicate, which included Mr McKillen and Riverdance creators John McColgan and Moya Doherty, but the loans were taken over by Nama in June last year.
“The loans were sold for in excess of € 800 million with Nama recovering 100 per cent of the original value of the loans plus interest,” Nama said yesterday. The agency is ready to sell billions worth of other properties in London.
The hotel group was valued at £665 million in 2009, leading some London property circles to describe yesterday’s deal “as fundamentally good” for Nama, even if Maybourne had never formally been put on the market.
Despite the price, the deal is likely to prove to be judicious by the Channel Islands-based billionaires, since Maybourne’s value could exceed £1 billion if Mr McKillen is persuaded to sell, particularly once the Ritz is added to the group.
Nama controls £26 billion worth of UK property loans, many in London. Given the rises in commercial property values in the city – partly provoked by the stock-markets crisis – it has decided to sell many of the properties by 2013.
The Barclay brothers were advised by the London office of United States law firm Weil Gotshal on the deal, while Nama was advised by London law firm Hogan Lovells and solicitors Maples and Calder in Dublin.