Johnny Ronan has been one of the great survivors of the Irish property sector. He was a major player in the commercial property market here before the 2008 crash and despite having his loans put into Nama, Ronan re-established himself as a key figure in the market here.
The 68-year-old businessman is a central figure in some of the most high-profile property development schemes in the State, but the US funders of his property ventures seem to squeeze him hard.
Having railed against the National Asset Management Agency (Nama) in a submission to an Oireachtas committee in 2015, a year after he bought his loans back from the State agency, Ronan is now the public face of a consortium that includes Nama and is set to develop the 37-acre Glass Bottle site in Ringsend, Dublin.
Up to 3,800 new homes and more than 90,000 sq m of enterprise and commercial office space are earmarked for the site, with Nama as a partner holding a 20 per cent stake. The Ronan family business, Ronan Group Real Estate (RGRE), fronted the winning bid for the development more than two years ago, and teamed up with a US investor.
Completion of the Glass Bottle project will have a major and lasting impact on our capital city. And RGRE is also involved in other major projects that will leave a significant imprint on the changing face of Dublin.
The Waterfront South Central Development on North Wall Quay, Dublin 1, envisages more than 1,000 apartments, as well as commercial and retail space, according to the RGRE website. At nearby Spencer Dock, where RGRE is building four interconnected office buildings fronting on to the river, the letting of the premises to the US multinational Salesforce represented the largest office letting in the history of the State, according to the group.
On the south side of the Liffey, on Tara Street, RGRE is involved in the construction of what it says will be Dublin’s tallest hotel and office building, the AquaVetro, while in Ballsbridge, Dublin 4, it is transforming the former AIB Bankcentre site across the road from the RDS for Facebook, which plans to have its European, Middle Eastern, and African headquarter campus there.
The Treasury Building on Grand Canal Street, the Westin Hotel on Westmoreland Street, and the Convention Centre on Spencer Dock, are among other well-known Dublin buildings with which the Ronan family business – or Treasury Holdings, in which Ronan was a 50 per cent shareholder – have been associated over the years.
But Treasury Holdings is no more, having had a liquidator appointed to it in 2012.
And when you look at the corporate filings of the property and development companies associated with the Ronan family, there is no missing the heavy presence of US private equity and asset management investors.
“Those guys charge huge numbers,” said a major Irish property developer who spoke to The Irish Times but asked not to be named. “They are very aggressive. You usually pay very high interest, and if there is anything left, they get a huge chunk of any profits, and you get a percentage. You get morsels when you are dealing with those boys, unless you hit the jackpot.”
Ronan used financing from such funds when buying his family group’s loans back from Nama in 2014 and continues to be highly reliant on them for his business dealings.
In 2013, Nama brought a High Court action against Ronan and his Treasury partner, Richard Barrett, in relation to a controversial €20 million transaction, known as the Tail transaction
RGRE was established by his father in the early 1970s, Ronan, a former accountant, said in a 2015 submission to the Oireachtas Joint Committee of Inquiry into the Banking Crisis. After leaving PwC to join the family business, he said, he “bought, sold and developed quality properties with some of the highest standards of design in Ireland. I have been involved in the development of some of the most iconic buildings in Dublin and have attracted first class tenants to occupy them.
“We are not housebuilders. Our portfolio is primarily income producing prime office and retail investment properties, which were built by RGRE over the years.”
In the years up to 2008, the group’s main financial backers were Bank of Ireland (about 45 per cent of its debt), and AIB (at 32 per cent). Loans were also taken out with Anglo Irish Bank, First Active (which was part of Ulster Bank), Permanent TSB, and Bank of Scotland. When the crash happened, many of these loans ended up in Nama.
“RGRE recently exited Nama, having repaid its debt in full and is now firmly focused on rebuilding its business and constructing quality buildings to meet the widely-publicised scarcity in supply in Dublin,” Ronan said in his submission to the Oireachtas inquiry. “Before this exit from Nama, it was widely known and documented that I had grave reservations in relation to the operation of Nama. These concerns remain.”
Nama had its own concerns. In 2013, it brought a High Court action against Ronan and his Treasury partner, Richard Barrett, in relation to a controversial €20 million transaction, known as the Tail transaction, that involved the alleged transfer of shares out of the Treasury group at a significant undervalue.
In approving a settlement of the action in 2013, the then head of the Commercial Court, Mr Justice Peter Kelly, noted that the deal would secure a minimum of €46 million for the Treasury liquidator and its unsecured creditors, but also €4 million for Barrett and about €3 million for Ronan.
The court, the judge said, was always concerned when defendants against whom serious allegations were made were not walking away empty-handed. But the settlement was in the best interests of the liquidation, he said, and was both legally and commercially justified.
Since emerging from Nama, RGRE has been busy getting involved in new projects in Dublin as the market at first recovered and then began to boom again. But these deals have all involved huge investment from US-based operators, such as private equity funders Colony Capital (now DigitalBridge group). When it provided the funding that allowed Ronan buy his way out from Nama, Colony was one of the largest private equity real estate funds in the world, and known for the high returns it expected from its investments.
More recently, when another US investment business, Fortress Investment Group, bought a European property portfolio worth €2 billion from Colony, this included Irish assets associated with RGRE. Something about the deal provoked Ronan to go to the courts, though the precise reasons why have not been publicly disclosed.
While the details of RGRE’s arrangements with its US funders are either not disclosed in, or hard to decipher from public documents, the significant scale of the US involvement is clear, and the high price the US funders charge can be discerned.
Since 2020 Ronan has been giving a flat in Birzebbuga, a seaside town in Malta, as his residential address in corporate filings. Moving to Malta can involve significant tax advantages
The 37-acre Glass Bottle site is owned by an Irish company called Pembroke Ventures DAC. Its latest annual return, for the year to the end of November 2021, showed Nama – a passive partner in the project – had 100 of Pembroke’s 600 issued shares, or 16.6 per cent. Brillcrest Ltd, associated with the Irish property development company Lioncor, had 30 shares, or 5 per cent, while Canora Ltd, which is associated with the Ronan Group, had 70 shares, or 11.6 per cent. A company called Pembroke DPH Ltd was by far the largest shareholder, with 400 shares, or 66.6 per cent.
According to its most recent annual return, Pembroke DPH is almost entirely owned by a Luxembourg entity called Pembroke Developments Topco Sarl. The Luxembourg company owns slightly more than 97 per cent of Pembroke DPH, with RGRE’s Canora owning the rest. The Luxembourg company is in turn owned by Oaktree Capital, a US asset management business with assets under management of more than €160 billion.
The above percentages may not reflect the net interest of the various parties in the Glass Bottle deal, but they presumably approximate to them. A key point to remember, according to the major property developer who spoke to The Irish Times, is that the US funders charge significant interest on the funding they provide while the project is under development, so that the amount of money they get out of a project quickly becomes very significant, and comes before any profit that might be made.
US private equity companies often use Luxembourg as a staging post for the money they invest. Usually, the money comes from funds based in locations such as Delaware or the Caribbean, is loaned to funding entities in Luxembourg, that then loan the money to projects or assets being funded in locations such as Ireland. In this way most of the return being made by the US investors in Ireland, goes out of the country as interest charges or loan repayments, and so is not taxed as profit.
The 2021 accounts filed in Luxembourg for Pembroke Developments Topco Sarl show that it had loans to the Irish company Pembroke DPH, and its subsidiary, Pembroke Debtco DAC, worth €87.4 million at the end of that year, and that interest of €6.1 million had been charged. A note to the accounts said the original interest rate on the loans of 9.995 per cent had been “amended” in July 2021, after which the interest rate became 14.995 per cent.
The 2021 accounts also recorded a loan to Irish company Ardquade Ltd – one of the key companies in the Ronan group – for €2.4 million, saying there was an interest rate of 8 per cent attaching to this loan until September 3rd, 2022. “It will then be amounting to 16 per cent as of December 3rd, 2022, and then 20 per cent until maturity date.” The maturity date given is June 4th, 2023.
Another Luxembourg entity with loans to a Ronan project in Dublin is called ColEmerald 4 Sarl. According to its 2020 accounts, it had a loan with a nominal value of €285 million out to Irish company Waterside Block 9 Developments Ltd, carrying a “cash interest rate” of 8 per cent.
To add to Ronan’s challenges, the global economic slowdown and the financial hit to Big Tech companies globally this year places question marks over the viability of the Irish commercial property sector
Waterside Block 9 is associated with the Waterfront South Central development on North Wall Quay. The Luxembourg accounts noted an impairment of €107 million against the €285 million loan during 2020. The Irish company, Waterside Block 9, is 70 per cent owned by ColEmerald 5 Sarl, of Luxembourg, and 30 per cent owned by RGRE Devco 1 Ltd, of Dublin, which is a Ronan company owned by Ardquade Ltd.
In November of last year, RGRE initiated proceedings in the High Court in relation to the Waterfront development. The proceedings were taken against DigitalBridge (formerly Colony Capital) ColEmerald 4 Sarl and ColEmerald 5 Sarl, both of Luxembourg, Waterside Block 9 Developments, Fortress Investment Group, and others. A temporary injunction preventing Colony from appointing a receiver to Waterside Block 9 was granted and was part of a wider dispute between RGRE and Colony over the sale by Colony of its Irish assets to Fortress. The litigation was moved to the fast-track Commercial Court, and then settled earlier this year.
According to the Irish property developer who asked not to be named, entering into funding deals with US private equity groups can involve a huge loss of autonomy, greater than is the case when, for instance, getting an Irish bank to fund a developer’s project.
“They are in total control. You project manage [for them] and you get a fee to run it and there are targets,” he said. “Normally, when you have paid their IRR [internal rate of return], there isn’t much profit left, and they get a chunk of it anyway.”
Ardquade Ltd is the owner of a number of valuable Ronan group properties and subsidiaries. In its 2020 consolidated financial report, Ardquade recorded a loss of €29 million, with the bulk of this being due to the drop in value of group high street retail properties as a result of the Covid pandemic. The value of group assets fell to €7.4 million, from €36.7 million, during the year, according to the accounts.
In the report, Ardquade said it had since year end become involved in the Glass Bottle project as “development manager” and that the project was expected to deliver “a significant level of fees for upcoming years”.
Since 2020 Ronan has been giving a flat in Birzebbuga, a seaside town in Malta, as his residential address in corporate filings. Moving to Malta can involve significant tax advantages.
The other directors of Ardquade are Ronan’s adult children, John jnr, Jodie, and James, all with addresses in Ireland. The company’s shares are owned directly by Ronan and his adult children. The mortgages registered against Ardquade include mortgages registered on behalf of ColLir Sarl and ColEmerald Sarl.
John Ronan jnr is chief planning officer with RGRE, James Ronan is chief development officer, and Jodie Ronan is chief operations officer. A spokesman for Johnny Ronan said he was outside the country on business and would not be available for interview for this article.
In October of last year, Ronan’s family business, Ronan Group Real Estate (RGRE) secured an injunction in the High Court temporarily preventing a large US funding entity, and long-time RGRE financial backer, from appointing a receiver to the Waterfront South Central development in the Dublin docklands, which is set to involve more than 1,000 residential units, as well as office and retail space. The dispute involved an alleged debt of €317 million owed by RGRE, the court was told.
Behind the immediate issue of the alleged debt and the appointment of a receiver was a wider matter to do with the decision of Ronan’s long time US financial backers to sell a portfolio of European property assets worth more than €2 billion, to another US entity, with the portfolio including Irish assets worth up to €1 billion with which Ronan is associated. Court filings indicate the dispute was resolved in July of this year.
The Irish assets include some of the most valuable and high-profile commercial properties in Dublin, including the new European headquarters of Facebook in Ballsbridge, and the Salesforce tower in the docklands.
To add to Ronan’s challenges, the global economic slowdown and the financial hit to Big Tech companies globally this year places question marks over the viability of the Irish commercial property sector, which relies heavily on multinational activity. The road ahead could be bumpy.
