TWO OF Ireland’s most high-profile developers, Joe O’Reilly and Paddy McKillen, are set to bank multimillion-euro profits over the next few weeks as they sell off a number of central London properties following a stronger than expected recovery in property prices in the UK capital.
The disposal of the blue-chip real estate comes as the National Asset Management Agency (Nama) prepares to take over the first tranche of toxic loans from the State’s most prolific borrowers.
Although Mr O’Reilly is numbered among the top 10 Nama developers, the three London properties he is selling fall outside the agency’s control as the loans were issued by the UK-owned Ulster bank. However, it is understood that Nama will have a claim over the personal assets of developers who are unable to repay their borrowings, so by selling the properties now, Mr O’Reilly and Mr McKillen ensure the money from these investments cannot be used to service any debts that may be destined for the toxic loans agency.
Mr O’Reilly, whose best-known investment is the Dundrum shopping centre, will pocket a profit of £1.7 million (€1.9 million) from the sale of a large retail building on the King’s Road in Chelsea, while Mr McKillen, who is resisting the transfer of loans to Nama, could net more than £11 million (€12.3 million) from the disposal of two retails units on Old Bond Street.
Mr O’Reilly bought 90-96 King’s Road for £11.3 million in November 2004 and last week sold the property to the Cadogen Estate, one of the largest land-owners in central London, for £13 million.
According to informed sources, the Cadogen Estate approached Mr O’Reilly with an offer to buy the building earlier this year. The successful deal has prompted the Nama-bound developer to quietly seek offers on two other London investment properties.
Two shops, at 139 and 141 Kensington High Street, were bought by Mr O’Reilly for £8.5 million in December 2005, 12 months before the market hit peak prices. The two properties are now on sale for £8.1 million.
Both Mr O’Reilly and Mr McKillen owe substantial sums to the nationalised Anglo Irish Bank and were named last year as members of the Anglo 10 – a “golden circle” of investors who borrowed money from the bank to buy a 10 per cent stake in the lender.
Mr McKillen, who controls an extensive property portfolio, including a 50 per cent share holding in the Jervis Street Shopping centre, is also a stakeholder in the Maybourne Hotel Group, which owns Claridges, the Berkeley and the Connaught hotels.
Loans financed by Irish banks to that group are expected to be transferred to Nama due to the shareholding held by financier Derek Quinlan in the business.
However, it is understood Mr McKillen and other shareholders in the group are preparing to buy out Mr Quinlan’s stake, which would enable them to refinance the loans and avoid the transfer into the toxic loans agency.
Market sources have speculated that this drive to buy Mr Quinlan’s stake in the Maybourne Hotel Group may be behind Mr McKillen’s decision to sell a number of London properties.
However a spokeswoman for the developer told The Irish Times Mr McKillen was “persuaded” to put his Mayfair property on the market due to the “high level of interest” in the two buildings.
Mr McKillen bought 11-12 Old Bond Street for £6.8 million in February 2002 with a loan provided by Bank of Ireland. The solicitor Ivor Fitzpatrick, was a joint owner of the property but it is understood he has since sold his interest in the asset to McKillen.
It is understood at least two more central London properties in which Mr McKillen has a stake are also up for sale.
