BERNARD McNAMARA: Clare-born developer Bernard McNamara took the public ‘hit’ for the collapse of PPP schemes in Dublin
IT HAS been a tough year for Bernard McNamara – much of it in the public eye. Indeed, he ended up taking all the flak over the collapse of public-private partnership (PPP) schemes to regenerate five run-down social housing estates in Dublin, even though another developer – Castlethorn’s Joe O’Reilly – was also involved.
O’Reilly (Dundrum shopping centre, Swords Pavilions, big plans for O’Connell Street in Dublin) kept well under the radar, as he always does. But McNamara put himself in the spotlight and must have found the negative feedback quite traumatic – especially for a man more accustomed to being lionised as a “financial wizard”.
The PPPs, worth more than €900 million in total, fell apart last May amid a welter of recriminations. McNamara cited “adversely changed circumstances” in the housing market, new guidelines requiring developers to build larger apartments and energy regulations. But there was a lot of anger in the communities being left in the lurch.
To stave off legal action by Dublin City Council, which strongly denied any suggestion that it had “moved the goalposts”, McNamara agreed last September to pay the council €1.5 million in compensation – small beer, given the scale of the PPPs – as well as handing over all drawings and plans for the five regeneration projects.
Six months earlier, in what was interpreted as a sign that the once highly acquisitive developer was “drawing in his horns”, he sold his 14.5 per cent stake in the Superquinn chain for an undisclosed sum; in 2005, he had been a member of the consortium that acquired the supermarkets from Feargal Quinn and his family for €450 million.
It also emerged that McNamara was seeking to dispose of other assets, including the Richard Alan and Zerep shops in Dublin’s Grafton Street (valued at the time at €42 million) and the long-closed Ormond Hotel, which was said to be worth €15 million. In the event, these disposals did not proceed – mainly due to the onset of recession.
More damaging was a Sunday newspaper speculating that McNamara had €1.5 billion in borrowings from the banks, secured on his extensive property portfolio. Again, the Clare-born developer had to come out in public, making it clear that he had “sufficient assets” to cover debts and that his business was not in financial difficulties.
One of these assets is the 24-acre Irish Glass Bottle site in Ringsend, which a consortium led by McNamara acquired from Paul Coulson’s Ardagh group for €412 million at the height of the property boom in October 2006; to put this in perspective, Liam Carroll had snapped up a 12-acre site next door for just over €20 million seven years earlier.
McNamara sank €57.5 million into the Becbay consortium, most of it in the form of “mezzanine finance” from clients of Davy Stockbrokers. His partners are financier Derek Quinlan and the Dublin Docklands Development Authority (DDDA) – with Anglo Irish Bank providing €288 million for the acquisition, secured on the value of the site.
Seán FitzPatrick, former chairman of Anglo Irish, was on the DDDA’s board at the time, while its then chairman, Lar Bradshaw, was a non-executive director of the bank.
According to the authority’s chief executive, Paul Maloney, they absented themselves from the board meeting which decided to take a 26 per cent stake in Becbay.
Last month, Maloney revealed to an Oireachtas committee that the DDDA had stopped paying interest on its share of the debt – after its partners had already taken this course. As for the value of the Irish Glass Bottle site as an asset, he estimated that it had fallen by 20 to 30 per cent – a remarkably optimistic view in the current market.
According to a report commissioned by Davy Stockbrokers in January, the site is probably now worth just over €160 million – a 60 per cent drop from its acquisition cost. Based on this figure, the value of the DDDA’s stake – said to be worth €117 million at the end of 2007 – has fallen to just over €41 million, and it’s left nursing a €75 million debt.
Bernard McNamara, who controls 41 per cent of Becbay, and Derek Quinlan, who holds the remaining 33 per cent, are even more exposed.
McNamara’s buying spree included the Burlington Hotel, for which he agreed to pay €288 million in March 2007 and the Allianz site next door, which cost about €100 million. Along with Jerry O’Reilly, a frequent partner, he paid €46 million for the decrepit Carrisbrook House in Ballsbridge, with the intention of building something much better on the site.
Although the Burlington reopened last April, no provision for a replacement hotel was made in the redevelopment scheme, which would consist mainly of offices and apartments. This was approved by Dublin City Council last May, but then appealed by An Taisce and others. An Bord Pleanála is now seeking further details on the project.
At Elm Park on Merrion Road, despite winning plaudits for its high architectural quality, McNamara and his partners in Radora Developments (Jerry O’Reilly and David Courtney) have had to sell apartments at discounts of at least 20 per cent as well as offering interest-free loans for five years to entice prospective purchasers.
There have also been high-profile court cases. The Radora trio (along with businessmen Bernard Doyle and John Sweeney), having bought the Shelbourne Hotel in 2004 for €120 million and then spent €83 million refurbishing it, have sued the Marriott group claiming that it was being run in a “shambolic style” – a claim Marriott strongly denies.
Another High Court action by five former partners, including Paschal Taggart, seeking to compel McNamara to pay them €7.5 million for options on a number of properties off Grafton Street, was settled last December. Meanwhile, it is believed that his Grattan Property group is submitting monthly reviews of its property portfolio to the banks.
Irish Times
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