/ 31 January 2011

Quiet couple amassed millions in debt

A lawyer and his doctor wife who blazed a trail during Ireland’s property boom on the back of colossal credit — buying up several London trophy buildings on the way — now owe more than €800-million 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 against them by the Bank of Ireland in trying to recover debts of about €70-million.

The couple, from Killiney, County Dublin, are fighting the case, saying the bank is trying to make them sell one of their prime London assets — Sanctuary Buildings, used by the United Kingdom’s department for education and skills — without legal entitlement.

The office block is close to the Houses of Parliament and was the first of many audacious moves made by the solicitor and his wife into the property market at a time when Ireland’s banks were making huge loans that have since brought the country to its knees and forced Dublin to accept a bailout from the European Union and the International Monetary Fund.

The bank lent the O’Donnells €26,7-million towards the £170-million purchase price in 2006. The couple then went on to expand their empire to Stockholm, where they bought the city’s biggest office block, Fatburen, for €285-million.

In April 2008, when the worldwide credit crunch was beginning to bite and had already claimed the likes of Bear Stearns in New York, the couple were still able to access funds.

Strength of the euro
With the strength of the euro in their favour, the O’Donnells managed to outbid a group from Dubai to pay a record $172,5-million for an office building on Pennsylvania Avenue, Washington, DC, just a few blocks from the White House.

This was what the O’Donnells Vico Capital described as “trophy class” with “sweeping views of the White House, the Monuments and the Potomac River”. Its tenants included a law firm and a merchant bank and it was described in the local property press as a smart buy. Vico Capital set a record, paying $9 323 for every square metre of their Washington investment. The previous record in the American capital was $8 893.

Arguably even more audacious was the acquisition of two buildings in London’s Canary Wharf — the purchase of 17 Columbus Courtyard in 2005 for £125-million and 15 Westferry Circus for £140-million. The first building is home to Credit Suisse and the second to Morgan Stanley.

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

The couple’s 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 €1,1-billion.

Out in public
They are, however, a low profile couple and are aghast that their private financial affairs are now being made public. “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 is the latest in a series of court actions being instigated against property developers who are 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.

Brian O’Donnell (58), one of Dublin’s leading commercial lawyers, first diversified into a serious property business in 1999. With access to funds from a string of banks he made his audacious moves in London, Scandinavia and the US.

Ten years later he and his wife, now 56, who are relatively low-key on the Dublin social circuit, were listed on the Sunday Times Rich List as the 178th richest in Ireland, alongside another, more high-profile property investor, Derek Quinlan.

Quinlan, a former tax inspector who also caught the property bug, ended up with the crown jewels of London’s hotel and retail trade, including the Savoy Hotel, Claridges and a retail block between Harvey Nichols and Knightsbridge in London. — Guardian News & Media 2011