McNamara undone by confidence in market
ANALYSIS:The developer’s mid-noughties spending spree on commercial property left him badly exposed to prices crash
BERNARD McNAMARA, who turned 60 yesterday, came up to Dublin from his native Co Clare in 1984, determined to find contracts for the eponymous building company founded by his father, Michael McNamara, back in the 1940s.
Over the decades since he has created an enormous contracting business while branching out into property development, property investment and hotel ownership.
Often he marries the various activities, with his building company constructing commercial property for a separate company which might in turn hold the property as an investment.
The building company he took over from his father, Michael McNamara Co, has a lengthy record of building for both the public and private sectors, with the public work including clients such as hospitals, universities and government departments.
His move to Dublin was a success from early on and he was well established when the Irish property market started to take off in a serious way in the mid-1990s. McNamara rose with the boom, increasing the turnover of his various operations as every year passed, growing in ambition and in personal wealth.
Around 2006 and 2007, he and a number of other mega developers went on a spending spree that even at the time seemed unreal. Often working in consortiums, his name cropped up again and again as Irish commercial property deals created headline after headline. He obviously had no difficulty sourcing funds from his various bankers, and began to resemble a type of shopaholic of commercial property.
The sudden collapse of the Irish property market has left him hugely exposed, and the suspicion is that McNamara, like other mega developers, must be close to, or actually, insolvent. In an attempt to bolster up his businesses, he has mortgaged or remortgaged all his personal assets.
Earlier this week the Commercial Court was told he does not have any unencumbered assets left. “He is no longer a person of significant net worth.”
In an extensive interview with the author Ivor Kenny for his 2001 book, Conversations with Chief Executives, McNamara told of how his father bought a house on Raglan Road, in Dublin 4, for £34,000 in the mid-1970s, so his children would have somewhere to stay when studying at university. McNamara studied business rather than engineering, partly at the urging of his father, who said: “A lot of builders . . . get into trouble because they think that cash flow means they own the money.”
McNamara returned to Co Clare after university to work in his father’s building business. While there he became involved in Fianna Fáil, was twice elected as a councillor, but failed to win a seat in the 1981 general election.
He has maintained his contacts with the party, hosting dinners (latterly in his own hotel) in Galway during the Galway Races at which senior party figures are usually in attendance.
McNamara tends to be well spoken of by those who know him – though no one denies that he can be as tough as nails and he is said to have a ferocious temper which flares up from time to time. Networking played a key role as he sought to build his business, as he made clear in the Kenny interview. Public projects and projects that benefited from tax schemes were joined as the boom gathered pace with a succession of commercial property developments.
By 2000 he was living in what newspapers described as a “palace” he built on the site of the former Japanese embassy on Ailesbury Road, Dublin. Later that year he bought the house next door, annexed some of its garden, and then sold the house again.
During the early years of the new century McNamara became known publicly as one of the top developers in an economy that was becoming fixated on property, associated profits and the developer moguls. In contrast to developers such as Liam Carroll, the quality of the work done by McNamara over the years is generally recognised. His sister, Shelley, was elected to Aosdána in 2006, the first architect to be so elected.
Around the middle of the so-called noughties, when the foreign borrowings of the Irish banks were going through the roof, McNamara and others went on a lavish shopping spree, obviously confident of the robustness of the property market and the economy in general. He spearheaded one of the mega deals of the later boom when he and others paid €412 million for the former Irish Glass Bottle site in Ringsend, Dublin, in late 2006. “The developers began to think they were masters of the universe,” says a source who knows McNamara. “They wanted to set new standards, with projects such as the Shelbourne . . . They began to believe their own publicity.”
Companies’ Office records show an amazing web of companies with which McNamara is associated. They tend to have intercompany loans, personal loans from McNamara and personal guarantees. One of his main holding companies, Adenway, is unlimited, meaning it, and McNamara, will not enjoy the benefits of limited liability if it gets into difficulty. Michael McNamara Co is also unlimited. “Bernard is an accountant, not a builder”, the source who knows him points out.
Many believe much of McNamara’s interwoven empire is likely to end up in the ownership of the National Asset Management Agency. His construction business is reduced but still viable, but McNamara is believed to be, in essence, now working for the banks.
McNamara may be the best person for coming up with creative solutions for maximising the value of his various properties (which in the main are well located). The greater the value that McNamara can get from them, the smaller the losses that will arise for the banks (and the taxpayer). McNamara should not be underestimated, friends say.
Meanwhile “he’s holding up pretty well,” says the source. “He does feel a bit that there were some fair-weather friends, people whom he would have expected to be more understanding. ” On RTÉ radio yesterday, McNamara said he was broke, had debts of €1.5 billion, and would do what he could to meet his debts from his earnings.