PROFILE: PADDY McKILLEN: A low-key character who created a property empire is the focus of a High Court test case

ANYONE WHO knows Paddy McKillen recognises how strongly he objects to becoming a customer of the National Asset Management Agency (Nama) – and how this media-shy, almost reclusive, businessman shudders at the prospect having to take centre stage in the most high-profile case to reach the Four Courts this year.

In a landmark action – the first legal challenge against the Nama legislation – McKillen and 15 of his companies are trying to block the transfer of his loans to the agency.

The action begins today before a three-judge division of the High Court set up for this challenge.

McKillen claims he is a good borrower, meeting all interest due on his bank loans and that he is being victimised by the decision to bring him into Nama.

The 55-year-old businessman claims Nama will ruin his ability to refinance loans elsewhere and ultimately his chances of protecting a strong business that he has spent 35 years building.

McKillen has claimed he has not bought Irish assets since 1998 and so has avoided speculative development that has cost the banks and their top borrowers billions. While he may have avoided the excesses of the boom, McKillen made his fortune in property.

Originally from Andersonstown in west Belfast, he left St Mary’s Christian Brothers’ Grammar School and his home at 16 to move to Dublin to grow the family car repair business, DC Exhausts.

He quickly saw there was more money to be made from building outlets and renting out property than from fitting exhausts to cars.

McKillen turned his focus to buying prime sites and developing properties, mostly offices and retail space, eventually selling DC Exhausts to US motor giant Ford in the early 1990s.

Ironically, one of the buildings he developed and still owns a share in is the Treasury Building, home to Nama – this makes the State loans agency his tenant. He co-owns the building with Johnny Ronan of Treasury Holdings, a man with whom he developed properties during the 1990s.

The turning point that moved McKillen into the league of Ireland’s super-rich was the Jervis Shopping Centre in Dublin in the mid-1990s.

McKillen and his partner, Pádraig Drayne, purchased the old Jervis Street hospital in 1995 for £3.5 million and completed the centre in just 13 months, with financing from a group of banks led by Anglo Irish Bank.

At 1.25 million square feet, the centre was the largest construction project in Ireland at the time. Built for more than €30 million, it was worth many multiples of this on completion.

Bill Barrett, a senior banker at Anglo, played a pivotal role with McKillen in convincing large British retailers such as Debenhams, Boots, Argos and Dixons to set up in Jervis. It was the beginning of a long relationship between the rapidly growing bank and McKillen.

The relationship became so strong that, in July 2008, McKillen was one of the 10 trusted customers of Anglo approached to buy 10 per cent of the bank’s shares held by Seán Quinn which the bank placed to avoid a share price collapse at a volatile time.

The bank’s transaction is the subject of a Garda investigation.

In 2006, McKillen borrowed from Anglo to spend $170 million on a 21-storey office tower in Boston which is home to Anglo’s head office in the US.

McKillen felt the Irish property market was overheating when he saw five-acre sites selling for more than €100 million at Sandyford in south Dublin.

He turned his back on Irish development, buying into businesses and investment properties.

He set up and grew high-street shops and restaurants such as Champion Sports, Muji, Wagamama, Captain America’s, Schuh and Tower Records.

He has spread his interests overseas, investing in retail buildings, hotels and property, and businesses in the US, France, eastern Europe, Japan, Vietnam and Argentina.

McKillen’s Irish interests account for 23 per cent of his business. Adding his UK investments brings this to 70 per cent. He spends about 20 nights a year in Ireland and divides his time between London and Los Angeles, where his wife and children live.

The Maybourne Hotel Group, which is behind the five-star luxury Connaught, Berkeley and Claridge’s hotels in London occupies most of McKillen’s time now. The chain could sell for £1 billion (€1.157 billion), clearing bank loans of £630 million, though McKillen is thought to want to hold it for the long-term, expanding and opening new hotels in Paris and New York.

The purchase of the hotel group in a deal brokered by Derek Quinlan’s private equity firm Quinlan Private was one of the deals of the Celtic Tiger era, showing that the debt-fuelled Irish could compete with and beat cash-rich Arabs, the wealthiest men in the world. The hotels and their 537 bedrooms account for one-quarter of London’s luxury five-star hotel market.

McKillen owns the largest single shareholding in the hotel group ahead of the Green family, from Manchester; Derek Quinlan, whose stake is now controlled by his banks; and stockbroker Kyran McLaughlin, who owns 2 per cent.

Occupancy rates have soared at the hotels, particularly the Connaught, which has recently undergone a £70-million face-lift.

Overall, the McKillen “connection” accounts for bank loans of €2 billion, including €800 million at Anglo, though his share of these debts is significantly smaller than this.

He shares the loans with his co-owners in the Maybourne Group, which has debts of €800 million, and through his partners – Pádraig Drayne, in Jervis and other shopping centres in Northern Ireland and Britain; and Tony Leonard, his partner in Clarendon Properties, which owns assets at home and abroad, particularly in Boston.

Among his other partners is U2 frontman Bono who is a co-owner of the Clarence Hotel in Dublin.

For a man who prefers to stay well-below the parapet, McKillen will today storm Nama’s trenches at the start of a very public battle.