It seems that NAMA has sold the €47m loan on the Ritz-Carlton hotel it was owed by Treasury Holdings company, Carrylane Limited, and if you believe Brian Carey in the Sunday Times yesterday, then it got “between €10m and €15m” or between 21-32c in the euro. The buyer is Sugarloaf Ventures Limited, an Irish-registered company which is backed by what the Sunday Times calls “Swiss investors Midwest and Brehon Capital”. Brehon Capital Partners appears to be an Irish concern, with an address at “5 Schoolhouse Lane, Dublin 2”, the same registered address as Sugarloaf Ventures Limited. Midwest Holding AG does indeed appear to be Swiss-based, and it is not the first time the two have teamed up for an Irish property venture, having previously bought the Marker Hotel in Dublin’s Grand Canal Square. US concern, Ranieri was previously in the running to buy the debt but seems to have fallen away.
NAMA will probably be happy to see the back of its involvement in the Ritz-Carlton, a hotel development at Powerscourt, county Wicklow which has been distinctly underperforming with poor occupancy rates, trying to compete in the crowded luxury hotel marketplace in an economy which is still in recession. The takeover by Sugarloaf however, means troubling times lie ahead for the suite owners at the complex, including RTE’s top paid presenter, the 65-year old €630,000 a year Pat Kenny, who, the Sunday Times reported in June 2012 was a buyer of one of the suites which were sold “for up to €2m”
The suite owners are reportedly owed back rent. Worse, they believed they would be guaranteed minimum rental income for a fixed period. But alas, the new owner has renegotiated the rents with some suite owners and it seems the refuseniks will have the rent guarantees repudiated and be left to their own devices if they want to rent out their suites. Meanwhile, they face annual service charges of €15,136 and the Sunday Times reports that they will face “forfeiture of the suite lease” if they don’t cough up.
Pat is on the record as saying this investment in the suite was considered sound at the time, and that in time, it may have been a retirement facility for him and his family. And indeed, back in 2006, Pat was certainly not alone in investing in property.
There are a couple of legacy matters here though. There may be a mortgage or other loan on the suite to Pat and the suite has probably declined by 60% from its peak value – property generally has declined by 50% since 2007 and with the repudiation of the minimum rent, the decline in the Ritz Carlton suites is likely to be more. And secondly, there is the question of tax breaks. The regular audience on here will know that the €212m development of the Ritz Carlton involved the biggest single residential property tax break in the history of the State, so big in fact that the government had to apply to the European Commission for approval of state aid. That application was belatedly made by then foreign affairs minister, Micheal Martin and now, the EC has refused to hand over the paperwork in response to a information request from here, and the matter is before the EU Ombudsman as a complaint at present, who has given the EC until the end of May 2013 to comment on the complaint. The Sunday Times cites Sugarloaf claiming that the Revenue Commissioners may seek clawbacks of the taxbreaks from those suite owners whose suites are no longer considered part of the hotel. There are some 80 suites, and it seems that just under half – 37 – are no longer considered part of the hotel. It is not known if Pat’s suite is one of these.
In the Dail recently, Minister for Finance Michael Noonan was asked how many clawbacks of tax have been pursued by the Revenue Commissioners. Minister Noonan said the Revenue don’t keep track because they regard clawbacks as additional rental income, but the response certainly gave the impression that the Revenue Commissioners do, contrary to popular belief, pursue clawbacks.
So, it would seem that poor Pat faces reduced rental income on his suite and possibly the Revenue Commissioners will be knocking on his door seeking a tax clawback. And if that weren’t bad enough, his €630,000 a year contract at RTE comes up for renegotiation imminently, and the public is baying for blood in an RTE that made a total loss of €70m in 2011, and is understood to have suffered a deficit alone of €50m in 2012.
This is the parliamentary question on tax clawbacks.
Dessie Ellis. (Nominated by: Pearse Doherty) : To ask the Minister for Finance if he will set out by year for 2010, 2011 and 2012, the total of any tax allowance clawbacks sought and the total actually obtained by the Revenue Commissioners pursuant to Section 23 of Chapter 11 of Part 10 of the Taxes Consolidation Act, 1997.
Minister for Finance, Michael Noonan: I assume the Deputy is referring to the clawback of tax relief associated with rented residential accommodation if the property ceases to qualify within the 10 year holding period. I am informed by the Revenue Commissioners that the relief is withdrawn by treating the relief already used as rent received in the period in which the property ceased to be a qualifying property. It is not possible to separately identify the amount of rent returned on the tax returns associated with this clawback and therefore the information requested by the Deputy cannot be provided.