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Irish Couple Owe €800M To Banks After Property Spending Spree

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Irish couple owe €800m to banks after property spending spree

A lawyer and his doctor wife who blazed a trail through Ireland's property boom on the back of colossal credit – buying up several London trophy buildings on the way – now owe more than €800m (£670m) to banks around the world, it has emerged.

The eye-popping scale of Brian and Mary Pat O'Donnell's debts has been laid bare in a court case brought by Bank of Ireland in relation to some €70m (£58m) in debts it is trying to recover.

[continues...]

That's what a bold investment strategy can do for you. All I can say is :blink:

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Freck! :blink:

I have to admit that I do wonder why I was so ignorant of all this lending to property going on in the past decade.

There is a small part of me that wonders if I was just naive and stupid for not getting on the band wagon. You get the impression that anyone could have walked into a bank with nothing and asked for for millions to buy property and have got it.

I hope it was not like that but the more I read about it the more I think that was the case. Perhaps if you are a lawyer or a doctor you could get the loans? Who knows?

I suspect that lots of people took out such loans, made a fortune and sold up before all this went tits up.

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For years, it probably seemed nothing could go wrong. The O'Donnells live in a clifftop home in one of Ireland's most salubrious suburban roads and count the U2 frontman Bono among their neighbours.

The O'Donnells' rise in the property sector mirrors that of dozens of other investors who got sucked in during the Celtic Tiger years when credit was cheap and capital yields, or profit on buildings, meant millions could be made, often in just a number of weeks.

But unlike many other middle-class professionals of their ilk who dabbled in the property market with a few buy-to-lets, this couple became major players and amassed an international property portfolio of more than €1.1bn (£921m) with a rent roll of some €150m (£125m).

They are, however, a low profile couple, and are aghast that their private financial affairs are now being made public. It is understood that as recently as last weekend, they tried to get a court approved mediation process underway.

"Most people in Dublin wouldn't know what they looked like. They are an extremely private family and would have hoped to have continued to conduct their business in private," said a source close to the couple.

Their case isthe latest in a series of court actions being instigated against property developers now bearing the brunt of Ireland's financial collapse.

According to informed sources there are two other private investors in the O'Donnells' Sanctuary Buildings in Westminster and there are concerns that the court case will lead to "value destruction". However the O'Donnells are determined to tough it out and have been given three weeks to put together a case for a fuller court hearing.

O'Donnell, 58, is one of Dublin's leading commercial lawyers and ironically is on a list of 64 potential legal advisers approved by Ireland's National Asset Management Agency – the new state bank which has been charged with clearing the mountain of bad debt amassed by property developers during the good times. Nama said O'Donnell had not been used in any case.

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A 13.64% gross yield and it still went horribly wrong.

That doesn't say much for the prospects of the BTL crowd "enjoying" a sub 5% gross yield.

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as the old saying goes, if you owe the bank £1000 you have a problem. If you owe the bank £800,000,000 the bank has a problem

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as the old saying goes, if you owe the bank £1000 you have a problem. If you owe the bank £800,000,000 the bank has a problem

I think it is us who have that problem? Will UK tax-payers end up bailing out rich lawyers and doctors in Ireland?

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There is a small part of me that wonders if I was just naive and stupid for not getting on the band wagon. You get the impression that anyone could have walked into a bank with nothing and asked for for millions to buy property and have got it.

I know.

I could be living in that million-ga-zillion pound house I had my eye on in Devon ... mind you I don't think it'd be nice hiding from the bailiffs.

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Freck! :blink:

I have to admit that I do wonder why I was so ignorant of all this lending to property going on in the past decade.

There is a small part of me that wonders if I was just naive and stupid for not getting on the band wagon.

Just like the crooks in Iceland/The City who lent friends/colleagues £€$100's millions, it was who you were/rubbed shoulders with - nothing to do with ignorance!

"O'Donnell, 58, is one of Dublin's leading commercial lawyers and ironically is on a list of 64 potential legal advisers approved by Ireland's National Asset Management Agency"

Edited by erranta

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Normally, I'd say that the reckless minority who gamble should be left to their fate. The credit boom was so long and deep though that it seems the majority of economically active folk in this country bought into it. That's why we're in this mess. What happens when the sane and financially prudent form a minority come the day of reckoning? I think we know the answer - you fleece them to limit the pain for the majority...

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For years, it probably seemed nothing could go wrong. The O'Donnells live in a clifftop home in one of Ireland's most salubrious suburban roads and count the U2 frontman Bono among their neighbours.

Well that's one thing wrong with the place for a start.

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None of my home'owner' friends would care about this and would get annoyed with me if I told them about it. They never read things in papers that might shake their belief that property is king. All I feel is one word. Argh!

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I just love some of the 'coincidences' in the amounts:

Brian O'Donnell formed Vico Capital alongside his wife Mary Pat, a doctor, in 2005 ....

It snapped up Sanctuary Buildings in London, home to the Department of Education, for £170m, as well as the Canary Wharf offices of Morgan Stanley for £140m and Credit Suisse for £125m.

....

Vico is understood to have a series of debt maturities over the next two years, including a £140m loan from Morgan Stanley against Sanctuary Buildings

- High-flying Irish couple owe £675m on property deals - Telegraph 20 Jan

So, d'ya think Morgan Stanley stumped up that 140m, cos, having just bought their gaff, they knew he had (supposedly) 140m in collateral? Or, although highly unlikely ( ;) ) , d'ya think they just thought "f@ck, look at the fees!"?

Edited by Sledgehead

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According to the interweb, LLOY lent £120m for the Sanctuary Buildings deal:

PURCHASE PARAMETERS Amounts in £

COSTS

Agreed Purchase Price: 143,000,000

Purchase Costs 5.67% 8,105,000

Investment Banking Fees 2,145,000

Placement Fee 1,050,000

TOTAL ACQUISITION PRICE 154,300,000

SOURCES

Tranche A of Loan (Lloyds TSB)* 60,000,000

Financing charge 5.62%

Tranche B of Loan (Lloyds TSB) 60,000,000

Financing charge 5.75%

Rent in advance 1,400,000

INVESTORS FUNDING 32,900,000

TAIB (49%) 5,831,000

DCD (51%) 6,069,000

TAIB Investors 21,000,000

TOTAL SOURCES OF FUNDS 154,300,000

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more ...

Acquisitive Irish investor to sell in Victoria as Canary Wharf debt deadline looms - 15 October 2010

Property syndicate manager Vico Capital has put Sanctuary Buildings in London’s Victoria up for sale for £180m, as it next week faces a debt maturity on a £121m Canary Wharf office building

The Irish company, started by Brian and Mary Patricia O’Donnell, bought more than £600m of European property between 2005 and 2007 and now wants to tap into demand for prime assets.

It has appointed Jones Lang LaSalle to relaunch the sale of the 227,000 sq ft Sanctuary Buildings at 14-26 Great Smith Street, London, with a target price of £180m, reflecting a 5.5% yield. Vico paid £170m in 2006 for the property, where the Department for Environment, Food and Rural Affairs has a lease until September 2017.

A £140m loan from Morgan Stanley, which matures next year, is secured against the property. JLL began to market it last year, but did not find a buyer.

At Canary Wharf, Vico’s £69m senior loan secured against 17 Columbus Courtyard, matures next Wednesday.

Vico bought the 200,000 sq ft property, which is let to investment bank Credit Suisse until 2025, for £121m in 2005. It was one of the first assets sold by Canary Wharf Group following its takeover by Songbird Estates.

Morgan Stanley also provided debt for the purchase, which was then securitised, and there is an additional £30m of junior debt from an unnamed lender.

In a note on the loan, ratings agency Moody’s said: “The borrower requested a two-year loan extension. The servicer has declined this request and the borrower is therefore considering alternative options to repay the loan at maturity.

“While the prime nature of the collateral may facilitate an orderly refinancing at maturity, the significant leverage of the B-note is likely to create complications for the borrower.”

In 2005 Vico also bought 15 Westferry Circus, a 175,000 sq ft office in Canary Wharf let to Morgan Stanley, for £135m. The debt for this purchase from Lehman Brothers and Anglo Irish Bank expires in 2012.

Vico’s largest investment was a 520,000 sq ft office building in Stockholm for £194m in 2007.

Jones Lang LaSalle declined to comment; Vico Capital was unavailable for comment.

Read more: http://www.propertyweek.com/news/irish-london-sale-and-debt-dilemma/5007292.article#ixzz1BaEBBYv1

propertyweek.com

Under Creative Commons License: Attribution

All got a pretty bad odour about it ....

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According to the interweb, LLOY lent £120m for the Sanctuary Buildings deal:

PURCHASE PARAMETERS Amounts in £

COSTS

Agreed Purchase Price: 143,000,000

Purchase Costs 5.67% 8,105,000

Investment Banking Fees 2,145,000

Placement Fee 1,050,000

TOTAL ACQUISITION PRICE 154,300,000

SOURCES

Tranche A of Loan (Lloyds TSB)* 60,000,000

Financing charge 5.62%

Tranche B of Loan (Lloyds TSB) 60,000,000

Financing charge 5.75%

Rent in advance 1,400,000

INVESTORS FUNDING 32,900,000

TAIB (49%) 5,831,000

DCD (51%) 6,069,000

TAIB Investors 21,000,000

TOTAL SOURCES OF FUNDS 154,300,000

nice fees ...

nice post ...

linky please.

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http://www.irishtimes.com/newspaper/finance/2011/0121/1224288008726.html

More coverage of the court case. 457m owed to JP Morgan and 235m to the Germans. Thankfully the British banks are not mentioned.

Seems like the Judge has his head screwed on when he mentions that they are using "excessive valuations" in an attempt to justify they are not bust.

Also he states that he gets 504K rent from a property in Canary wharf that he has a loan of 128million on. I make that a 0.39% return, he would get more in a bank account.

No wonder they are bust.

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http://www.irishtime...4288008726.html

More coverage of the court case. 457m owed to JP Morgan and 235m to the Germans. Thankfully the British banks are not mentioned.

Seems like the Judge has his head screwed on when he mentions that they are using "excessive valuations" in an attempt to justify they are not bust.

Also he states that he gets 504K rent from a property in Canary wharf that he has a loan of 128million on. I make that a 0.39% return, he would get more in a bank account.

No wonder they are bust.

The bank said valuations were excessive, not the judge.

Plus the projected income of €2.1m comes after two years of near zero income. Sweet.

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I think it is us who have that problem? Will UK tax-payers end up bailing out rich lawyers and doctors in Ireland?

yes that's the full version of that saying.

if you owe the bank* a large slice of cash you have a problem.

If you owe the bank an obscenely large slice of cash the bank has a problem

If you owe the bank the sort of sum that's big enough to be a discernible blip on the national accounts then the whole country has a problem.

* - and one or both of your ability to make repayments & the value of the 'assets' you've borrowed against are called in doubt.

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I think it is us who have that problem? Will UK tax-payers end up bailing out rich lawyers and doctors in Ireland?

Well we are supposed to be lending Ireland £7bn as well as our part of the EU bailout.

There is talk today of RBS buying themselves out of the APS but it included lots of debts by their Ulster Bank

Royal Bank of Scotland has decided not to enter the Irish government’s insurance scheme, which could have protected billions of pounds of loans held by its subsidiary Ulster Bank, in a sign of growing confidence that the bank will not need further support.

The decision is likely to appease officials in Ireland, who were keen that the insurance scheme was focused on offering protection to the country’s domestic banks.

RBS laid out formal plans to pump £282bn ($434bn) of risky loans and other assets into the APS last year and signalled that it may look to use similar schemes in other countries.

However it is understood that given the extent of protection it has obtained through the APS, and the cost and complexities associated with these kinds of insurance schemes, the bank decided against entering Nama as well.

A significant proportion of bad loans made by Ulster Bank are already protected under the APS.

The £282bn total pool of insured assets includes £27.5bn of potentially toxic assets held under RBS’s Europe and Middle East division, the majority of which relate to loans provided by Ulster Bank.

The biggest chunk of this – £13bn – relates to 10,000 commercial real estate loans that originated in the Republic of Ireland and Northern Ireland. All of these loans were in default at the time they went into the APS.

Another £7.6bn of RBS’s insured assets relate to corporate loans made by Ulster Bank, while the APS also protects £4.7bn of Irish residential mortgages and a small number of loans to small businesses and personal loans and overdrafts.

Allied Irish Banks and Bank of Ireland will be the main beneficiaries of Nama. Shareholders in Allied Irish Banks have approved plans to funnel €24.2bn of property loans into the scheme – about a fifth of the bank’s total customer loans – while Bank of Ireland is planning to protect up to €16bn of assets

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