The downfall of the dynamic duo’s – Richard Barrett and sidekick Johnny Ronan’s – business empire continues apace with a report than an interim examiner yesterday appointed to Carrylane Limited, the company that owns the Ritz Carlton hotel in the Powerscourt Estate in county Wicklow. Declan Taite has reportedly been appointed interim examiner and the case is due back in court again on 28th November 2012.
NAMA is one of the creditors to Carrylane Limited being owed €47m, having acquired a €45m-principal loan from IBRC, the €2m difference is presumably accrued interest. It is reported that NAMA hopes to now sell the loan to the operator of the hotel, Ritz Carlton BV Group but the sale was dependent on the appointment of an examiner. It is not reported what NAMA will get for the loan.
The examinership of Carrylane Limited should not affect the operation of the hotel which employs 293 people and which does brisk business in weddings and business conferences. Eyebrows will be raised in the hotel industry at the report yesterday that occupancy at the hotel was just 41% last year.
Carrylane is the developer of the hotel, and makes its money from fees from the operator, Ritz Carlton and also from the sale of suites. The site of the hotel is apparently still owned by the Powerscourt Estate and Carrylane pays €400,000 per annum in rent for the site. Buyers of the suites are reported to have included RTE’s Pat Kenny and Cortina-averse developer, David Agar. Sean Mulryan was also associated with the purchase of two suites at the hotel which reportedly were originally for sale for “up to €2m”.
UPDATE: 27th November, 2012. Brian Carey at the Sunday Times appears closest to this story and reported in last weekend’s paper (not available online without subscription) that NAMA is in fact owed €127m on loans associated with the Ritz Carlton hotel in Powerscourt, comprising €47m owed by Treasury’s Carrylane and a further €80m owed by the Exhort Co-ownership. Brian is being coy about the 157 investors, presumably individuals who comprise the Exhort partnership whose loans were originally from IBRC and he doesn’t name any of them. They are distinct from the 58 investors including RTE’s Pat Kenny who have individually invested in suites at the hotel. Brian says that NAMA “will take a bath” on the loans, though NAMA does expect to dispose of its Carrylane loans to Ritz Carlton, the hotel operator. However investors including RTE’s Pat face losses on rent already owed and face a bleak future with rent no longer guaranteed on their suites. Of course if the hotel goes bellyup, then the investors might additionally face clawback demands from the Revenue Commissioners.
UPDATE: 28th January, 2013. Yesterday, Brian Carey in the Sunday Times – not available online without a subscription – reported that the “proposed” new owner of the Ritz Carlton, US fund Ranieri Partners has written to the investors in suites at the Powerscourt complex requiring them to accept a 50% reduction in guaranteed rent between now and October 2014 and a 50% reduction in their entitlements after that date also – their entitlements after October 2014 appear to be 75% of the rent received by the hotel operator. For those suite owners – included it is understood and reported in the Sunday Times, radio and TV presenter Pat Kenny – who refuse the offer, they face repudiation of their leases under Irish examinership rules which may lead to clawbacks of tax concessions as well as an uncertain future income.
UPDATE: 4th February 2013. Brian Carey in the Sunday Times – not available online without subscription – continues to keep a close eye on developments in the Ritz Carlton. He reports in yesterday’s edition that 41 of the 80 suite owners have agreed to Ranieri Partner’s offer to reduce guaranteed rents by 50% until October 2014 and also to other reductions post-October 2014. The 39 remaining suites face having their leases repudiated entirely, though they would then be free to offer the suites for rent themselves or club together to market them. It is not known if Pat Kenny is among the 41 or the 39. Ranieri is still not the owner, but the betting is that it will be in the not-too-distant future.
UPDATE: 25th February, 2013. The colourful Ranieri moves a step closer to control of the Ritz Carlton in Powerscourt with the acquisition of NAMA’s €47m of loans which had originally been advanced by INBS to the developer Carrylane Limited. Looks as if Ranieri Real Estate, according to the Sunday Business Post – not available online without a subscription – is getting all its ducks in a row prior to taking full control of the development.
I bet they not the only ones,deal breakdown and analysis attached,Michael Martin….
“The Commission regrets that Ireland put the aid into effect, in breach of Article 108(3) of the Treaty on the Functioning of the European Union.
However, on the basis of the foregoing assessment, the Commission has decided to consider the aid compatible with the Treaty on the Functioning of the European Union.”
http://ec.europa.eu/eu_law/state_aids/comp-2009/nn030-09.pdf
@John, thanks for that and it is indeed worth a read. It rebukes current Fianna Fail leader but back in 2009, Minister for Foreign Affairs Micheal Martin for belatedly applying to the EC for state-aid approval for the tax breaks given to Messrs Ronan and Barrett in building the €212m Powerscourt Hotel. Yes the development cost of the Powerscourt Hotel was so great that it was necessary to get state-aid clearance for the tax breaks, this is the one and only time that such approval for an Irishg tax break was sought or deemed necessary.
Brian Carey in the Sunday Times (not available without subscription) last weekend wrote a feature on the Powerscourt development. The investors include not just Pat Kenny (see other blogpost this morning) but Seamus Murphy, the developer of the property in Balbriggan which is now set to become a primary care centre, Denis Desmond the music promoter, Sean Mulryan and Paul Begley the garlic/apple importer now doing a six-year stretch.
If the claims in the Sunday Times article are correct, then NAMA is in fact owed €95m on the development, not €45m as quoted in the Independent today. Also Pat Kenny admits he has loans, presumably to buy his suite which the Sunday Times claims would have been sold at between €680,000 to €1m, but Pat says that his loans are performing.
Tax-breaks were available to investors for a period of seven years which allowed the investment to be offset against other income. Handy for Pat when his pay at RTE was nearly €1m. But should the hotel be wound down, then the Revenue can theoretically claw back the tax breaks. Ouch!
Also, it seems that Treasury set up a company called Copper Lake to guarantee rent payments to the investors, who presumably would normally be paid by the hotel operator. €14m had been paid by Copper Lake until the start of this year when NAMA snaffled the €6.5m cash still remaining in Copper Lake. So Pat, along with other investors no longer have guaranteed rental income.
It would be nice if Pat acknowledged these matters before hosting discussions on property tax breaks, Micheal Martin whose efforts saved Pat and others a packet in 2009, developers generally, Treasury and Messrs Ronan and Barrett, Seamus Murphy and by extension Minister for Health James Reilly, NAMA and NAMA legal action/pursuit of Treasury.
I’m not sure if a US resident in entitled to lob in a FOI request to the EC but these letters would be worth a read,can’t find them anywhere online.
Assume,technically it was the “Revenue” that granted this aid,so at least Frank would very familiar with this scheme and dream!
“The Irish authorities submitted the information requested by letter of 1 April 2009, which confirmed that the aid in favour of the Ritz-Carlton Hotel had already been awarded by the end of 2006. Accordingly, the aid measure was transferred to the non-notified State aid registry under number NN 30/09.
(4) By letters dated 23 July 2009 and 7 December 2009 the Commission requested additional information. The Irish authorities responded by letters of 12 October 2009, 5 January 2010 and 25 February 2010”
Link above.
Pat from a good Sindo piece…ah sur he has no pension …had nothing to do with the tax breaks…
“I don’t generally comment on anything like this, but as I don’t have an RTE pension, this was part of my own efforts to provide for my old age. This is a tourist asset to Wicklow, with two golf courses and what have you, so it should be a very successful venture, but to be quite honest I’ve no idea how it’s doing,” Mr Kenny said.
“This is a very high-quality hotel in the Garden of Ireland, so to my mind you could say you’re very happy to be associated with it. Pretty much everything property-related in Ireland is a dud at the moment, so there’s no telling what things will be like in the years ahead,” he added.”
http://www.independent.ie/business/irish/kenny-putting-on-ritz-for-tax-relief-2245544.html
@John, copies of documentation requested from the EU – European Commission Competition Directorate. They should respond by 11th December 2012. You can monitor progress here.
http://www.asktheeu.org/en/request/state_aid_nn_302009_ex_n_6602008/new
For those of you keeping track.
The documents provided by Ireland to justify the largest property tax break during the property boom were requested from the European Commission. This letter was received today
You can keep track of this information access request here.
It will indeed be interesting to see the lengths then-foreign minister Micheal Martin went to, to secure what appears to have been a €212m tax break in 2009 as the country was in tatters.
http://www.asktheeu.org/en/request/state_aid_nn_302009_ex_n_6602008#incoming-780
@NWl / JG
re
http://ec.europa.eu/eu_law/state_aids/comp-2009/nn030-09.pdf.
The very opening line,
‘By electronic notification registered 19 Dec 2008’
That, for me, was the most significant element of that plea by the Irish Government to the European Commission, to allow special tax breaks for investors.
Remember the time frame, Dec 2008. After the job losses of the second half of 2008, Lehmans, the bank bust, the wreckless country busting bank guarantee etc etc, with 2009 looking to be a dreadful year, there was time for one last urgent effort to help the country.
Guess what it was? Look for a tax break for wealthy investors.
Ireland does not deserve its nationhood.
@Joseph Ryan,looks like Michael Martin went to bat for his developer buddies,can only imagine how many other skeletons are rattling around in his closet…..
“The total advantage resulting from the capital allowance is EUR 17.8 million.”
Link above.
@NWL excellent work,is it in the normal to request an extension ?
Third parties consultation all sounds very ominous…………
regarding,update,wasn’t it Balzac that said”behind every great fortune is a great…”
Best of the luck off the Irish,to the Lou’s new partners,they gonna need it.
Any sing of that paperwork requested ?
“Federal regulators last night seized a Texas bank founded by Lewis Ranieri, a Wall Street legend who grew rich in the 1980s as the pioneering salesman of a new investment product called the mortgage-backed security.”
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/07/AR2008110703599.html
“There are strange things happening down in Texas, at Franklin Bank, the lender that was started by Lew Ranieri, the man who is credited with starting the mortgage securitization business. It seems that the bank has been, well, ignoring, a lot of losses.
In a news release last night, the bank said its audit committee concluded that the bank had failed to record, or write down, real estate that it owned after foreclosure, had failed to take losses for loan modifications, and did not charge off uncollectable second-mortgages.”
http://economix.blogs.nytimes.com/2008/05/20/raining-on-ranieri/
It’s perhaps an “Irish” characteristic or trait…but you are awfully harsh and hard on yourselves and the few remaining “entrepreneurs” based at home.
In effect “Lou” I know it’s “Lew” just getting a dig in,has an awfully colorful past yet is greeted like the fu**ing second coming,lets say it would be ahem complicated for him to asset strip from a US Govt. agency over here.
“Two former executives of the Franklin Bank Corporation, a now-defunct lender started by the mortgage bond pioneer Lewis Ranieri, have been accused of hiding losses during the final days of the company.
In a complaint filed on Thursday in United States District Court in Texas, the Securities and Exchange Commission accused Anthony J. Nocella, Franklin’s former chief executive, and J. Russell McCann, the bank’s former chief financial officer, of misstating the health of their company during the financial crisis, when a series of mortgage loans on the bank’s books went sour and it struggled to stay afloat.”
http://dealbook.nytimes.com/2012/04/06/franklin-bank-executives-charged-with-fraud/