Are the media afraid of Wealthy Developers? by Ruth Coppinger TD

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Ongar Occupation

Are the media afraid of wealthy developers ?

None have mentioned the facts I sent them about the owner of the estate where the house is being occupied in Hansfield by homeless people. So, I’ll reprint the background here again. In a nutshell, I don’t think it would be too much to ask him to provide social and affordable homes to the Council, considering the taxpayer bailed him out on many occasions.

Here are the Facts on McGarrell Reilly/developer Sean Reilly…

Reilly’s NAMA loans cost the taxpayer over €150m in January 2014:

McGarrell Reilly has cost the state/Irish taxpayer €153m for its bad property loans. In January 2014,

NAMA sold aportfolio of its commercial property loans called Project Hollyat a 41% discount (meaning the company had owed €373m on them), to US vulture fund, Lone Star for €220m. This seems to have allowed McGarrell Reilly & its owner, Sean Reilly, to exit NAMA.

That portfolio was mostly, if not all, commercial rather than residential property, including ‘28 commercial property assets primarily in D1,D2 and D4 and a number of development sites’, including the 210,000 sq ft Iveagh Court Complex in Dublin 2, the Watermarque Building in Dublin 4 and CityNorth, an office and hotel development on 100 acres in county Meath.’

Lone Star flipped the assets little over a year later when it sold most of them in March 2015 for €350m i.e. it made a profit of €130m in that time.

A month later, in February, Reilly lodged a successful planning application for Barnwell/Hansfield which will make him huge profits

A month later, in February 2014, a company called HansfieldInvestments Ltd. filed a planning application to build 146 houses in Hansfield and Barnwell. This was quickly granted despite the fact that the directors of Hansfield Investments Ltd. are Sean Reilly’s daughters, Sharon and Deirdre Reilly from Dunboyne, Co. Meath and the company is basically a front for McGarrell Reilly.

According to the Sunday Times, Hansfield Investments spent €6.1m buying land for the development off the receiver appointed to Manor Park Homes, which had previously owned the site but went bankrupt during the crash and left unfinished estates behind it in Hansfield. The cash was provided by Nicole Junkermann, ‘a Monaco-based private equity investor’.

For the first phase of the development, ‘Prices for the two-bedroom properties start from about EUR 220,000, with the three-beds starting at EUR 260,000 and four-beds starting from EUR 340,000’. The planning permission for the 146 houses included 6 two-bedroomed houses, 114 three-bedroomed houses & 26 four-bedroomed houses so that would work out at a minimum of around €40m

– €6.1m land at 15% interest for 2 years = c. €2m =€8m funding costs = €32m
– say construction costs of c. 150,000 per house = c. €22m = profit of c. €10m is possible
= profit margin of 25% & return on €6.1m investment of 64% just on the first phase of the development!

Since the first planning application, they’ve also got planning for another 128 houses in Hansfield and they have 55 acres to build on in total that will take up to 600 houses altogether. I don’t think the €6.1m could have bought them all that – it was probably just for the first phase?? But I’m not sure.

Reilly’s close history with Anglo

Reilly was also one of the Maple 10 who were illegally lent millions of euro by Anglo in 2008 to buy out Sean Quinn’s disastrous CFD investment and prop up its collapsing share price. ‘In his evidence at the Dublin Circuit Criminal Court he explained how he had signed up for a “very simple share-purchase transaction over the course of a meeting of just 30 minutes”’ – to buy 1% of the bank for c. €45m!

Now one of 3 major property developer & NAMA debtors who are the main investors in a debt restructuring firm headed by Anglo’s former of head of Ireland lending , Tom Browne

Reilly still has close relations for ex-Anglo executives as he is one of the main shareholders in Le Bruin Private, a debt restructuring firm set up with Tom Browne, Anglo’s Managing Director of Lending Ireland until November 2007 (who was also on its Risk & Compliance Committee) & another former Anglo executive, Cathal FitzGerald, in March 2008.

Le Bruin’s website says: ‘We have successfully negotiated deals with NAMA, major banks and other creditors on behalf of our clients, restructuring portfolios that range from €5m to €1bn.’ – a lot of this would be restructuring loans Browne had originally lent as the head of lending with Anglo & presumably included Reilly’s loans.

‘Three big property figures – Michael O’Flynn, developer of the Elysian apartments in Cork; Seán Reilly, a Dublin developer; and Joe O’Reilly, developer of Dundrum Town Centre – each hold 5% of LeBruin. Both O’Flynn and Reilly are undergoing debt restructurings’

‘The company’s website says it has established a track record in dealing with the National Asset Management Agency and the leading banks. The website gives an example of an unnamed client whose €6 million in loans were transferred to an international purchaser as part of a loan portfolio sale, and for whom LeBruin helped negotiate a settlement. It involved the client paying €500,000 to acquire two of the 10 Irish properties used to secure the loans.’ – so the developer’s NAMA loans were sold to a vulture fund but as part of the deal, the developer got to keep 2 of the 10 original properties by paying the vulture fund €500,000 for them i.e. he bought his own loans back at a cheaper price – exactly what the NAMA legislation was said to prevent but NAMA can say they didn’t sell the loans back to the developer, the vulture fund did – even though it was part of the deal agreed by the developer to settle his debt with NAMA.

Le Bruin made after-tax profits of €659,756 in 2014, ‘a 119% increase on the previous year’ and ‘profits of over €514,365 in the year to April 2012’

Reilly has a giveaway deal for regenerating council housing with DCC

McGarrell Reilly Group through their subsidiary, Alcove Ireland Five, has also got the contract to regenerate the five-acre Charlemont Street flats complex. According to media reports, the terms of the deal with the council are that McGarrell Reilly
‘develop and hand over 79 apartments and a community centre as well as paying the council EUR 4.886 million. According to the council, the money is to pay VAT on the homes it acquires. The council would also be given the option to buy an additional 15 apartments at a 10 per cent discount and 58 units at full market price. The council will allow Alcove Ireland Five to acquire the freehold to the remaining land to develop housing, which the company would sell on the open market. Three commercial units, which are part of the development, would be leased to Alcove for 500 years. The new complex is expected to include 253 apartments in five blocks ranging up to six storeys.’

If that’s true, then it’s another incredibly good deal for Reilly as they get 5 acres of absolutely prime development land for free off DCC plus 174 apartments to sell on the open market plus the 3 commercial units, in exchange for only 79 apartments & just under €5m cash.

The state has also been paying him millions in rent

According to McGarrell Reilly’s Facebook page, the Central Bank was one of the tenants of the Iveagh Court Complex so Reilly would have been getting rental income off the state while he was in NAMA. Other instances where the state was paying Reilly rent include for an office building on Adelaide Road, Dublin 2, which is leased by the Department of Communications for €2.9m a year (‘well above the going rate’) on a 20 year lease that began in 2003. Reilly’s loan on this was from IBRC and was also sold on to Lone Star for €45m in April 2014 shortly after the Project Holly deal.

During the boom, Reilly had also assembled landbanks in Phibsboro, Stepaside, Dunboyne, and Kilcock to be developed later so he was driving up house prices by sitting on land banks as developers do. The loans on these landbanks were owed to Ulster Bank, which sold them off in a portfolio sale in 2014. Ulster Bank got a €15bn bailout from the British taxpayer via RBS so they’re also paying for Reilly’s gambling debts over there.

Ruth Coppinger TD