AKC News // Risk of loss led to McNamara PPP pullout

Analysis:Bernard McNamara has been cashing in assets over the last two months

News that developer Bernard McNamara is pulling out of a series of public-private partnership deals (PPP) with Dublin City Council is another sign that one of the country's most active property players is reining in.

Dublin City Council's statement yesterday made it clear why McNamara and the other private partner involved, Castlethorn Developments, are pulling out. It said that the changes in the economy and the housing market had "rendered these projects unviable from the private partner's point of view". In short, they ran a clear risk of losing money on the deal.

The private-sector players were to fund their end of it by selling about 800 of the 1,800 homes that were due to be built. However, building industry sources say that a 20 per cent-plus fall in property prices means that it would have been unlikely that McNamara would have made a return.

Houses and apartments are not selling, or are selling very slowly, in the current climate. On top of this, there is a backlog of an estimated 25,000 new homes on the market. Last week, McInerney Homes chief executive Barry O'Connor estimated it would take several months for these to sell.

McNamara (57), the principal shareholder in building company, Michael McNamara and Company, has been cashing in assets over the last two months or so. In March, he sold the 14.5 per cent stake that he held in the Superquinn grocery chain. He was an investor in Select Retail Consortium, which bought the Superquinn group for €450 million in January 2005.

He sold his stake to the consortium's other members, including developer Jerry O'Reilly, property consultants David Courtney and Bernard Doyle, and hotelier Terry Sweeney. The price was not disclosed. At about the same time, it emerged that he intends selling the Ormond Hotel on the north bank of the Liffey in the centre of Dublin. The property has lain idle for a number of years, and is expected to fetch in the region of €15 million.

McNamara is also selling two properties on Grafton Street in Dublin, the adjoining Richard Alan and Zerep stores, which are priced at €42 million.

As the Superquinn sale was a private deal, and his purchases of the Ormond Hotel and Grafton Street properties were also kept under wraps, it is hard to judge whether or not McNamara is going to lose or make money on these transactions.

However, he is in a position to be able to take a hit if he has to. Recent estimates of his personal wealth say he is worth close to €230 million.

According to its own figures, Michael McNamara and Company had a turnover of €611 million last year.

He and his company hold a range of assets and are working on a number of projects. These include the €450 million Elm Park residential and commercial development in Dublin 4, a 45-storey tower in London's Canary Wharf, the Burlington Hotel and a large apartment development in Galway, for which the building company recently won planning permission. Alongside this, he has the Parknasilla and Cork Airport hotels.

Michael McNamara and Company is also working on the €450 million Point Village development in Dublin, recently completed the €45 million revamp of Kilkenny rail station and the Cork Airport Business Park.

While industry sources agree that the company and its biggest shareholder will have plenty of tough decisions to make in the near future, overall, McNamara and his business are well placed to ride out the storm and will be primed to take advantage when it blows over.

Source: Barry O'Halloran, The Irish Times, http://www.ireland.com/newspaper/ireland/2008/0520/1211232309136.html

Date : 20-05-2008