Garrett Kelleher: Glittering prize of the Windy City
After seven long years, battles with Nama and with Anglo, Garrett Kelleher has a chance to win back the Chicago Spire – his visionary lakeside project
Published 16/03/2014 | 02:30
The tallest tower in the western hemisphere might, just might, get built after all. Last Wednesday, Irish developer Garrett Kelleher wrested back control of his signature project: the planned breathtakingly beautiful €1.5bn Calatrava-designed ethereal metal-and-glass spiral skyscraper he wants to build in Chicago.
It would be situated lakeside where the Chicago river drains into Lake Michigan, positioned at the centre of the city's skyline in the city that gave birth to the skyscraper.
But let's not get ahead of ourselves. Right now and for the last five years the project is a cofferdam, a great big foundation hole rather than the slinking superstar architect vision inspired by a smoke wisp snaking 2,000 feet into the air.
Kelleher would abhor the accent of doubt about the Spire being built, the positing on whether this might or might not happen. To him the matter is not in doubt. This is happening: he is building the world's highest residential building.
The St Patrick's Athletic Football Club-owning Kelleher has struck a deal with deep-pocketed Miami Dolphins-owning American billionaire Stephen Ross's company, Related – and is poised to snatch back control of the Chicago Spire project.
"As a developer with a 25-year history in Chicago, this site is important to us and we recognise its significance to the city," Curt Bailey of Related's Midwest arm told us. "This agreement provides a clear and certain path to resolution. We are pleased with the outcome, which offers certainty of payment or satisfaction of our claim through transfer of the property and a formal timeline for moving the process forward."
It's an eyebrow-raisingly conciliatory statement, a rowback from the court battle position that saw Related slam Kelleher's proposal as "illusory and a sham" and his funding plans as unclear.
The settlement has to be signed off by a bankruptcy judge next week, but it looks promising, with the judge congratulating the warring factions on striking a deal last week when the agreement was read into court.
Related bought the €69m Spire debt from Nama last year for around €27m and subsequently pushed Shelbourne into bankruptcy. Now Kelleher has teamed with Atlas, a US developer that has built thousands of apartments in the US and Britain. Atlas is to provide the funds to reimburse creditors, including Related.
Kelleher "is still the developer", Atlas chief executive Steve Ivankovich has said. "We are building exactly the same building that was contemplated to be built.
"For us, it was always about building the Spire," Ivankovich, a proud Chicago native, said.
Kelleher is "extremely pleased and delighted with the court case outcome and looking forward to building the Chicago Spire", Kelleher's lawyer said. "He expects to be back in the ground this year."
The Sunday Independent understands that the details of the settlement are that Related will support Shelbourne's proposal to recapitalise the Chicago Spire project and that Related has agreed to withdraw all claims against Shelbourne and Kelleher.
For its part, Shelbourne now has until the end of October to come up with €78m to pay off all claims and creditors on the Spire debt that Related owns. That gives Related a tidy, fast profit on its original outlay, an almost trebling of its money, but not the vast long-term riches developing the Spire might have yielded, or even the opportunity to sell the site, valued at around €180m.
Kelleher has the option of an extension to March 31, 2015, under the deal, but the price to be paid to Related then would be €81m plus a €16m deposit payment.
Crucially, Kelleher retains ownership of the site.
And though Atlas has agreed to support this mission, it is understood that Kelleher and Shelbourne are not bound to Atlas and could ultimately team with another funder.
Atlas has a 60-day exclusive agreement from when the bankruptcy agreement is signed off on (providing that it is), on March 24, to bring in financing, and then Kelleher has 10 days to accept or reject it.
"This is an enormous step on the way to getting the Spire built and firmly wrestling control back," a party close to Kelleher said.
But winning back control of the project is just one more twist in a tale with more twists than the slender corkscrew-shaped Spire.
If Shelbourne/Atlas don't come up with the money, Related gets control of the site, on which it planned to build a simpler two-tower residential scheme and to scrap the iconic Chicago Spire skyscraper plans, it is understood.
Then there's the small matter of raising the €1.5bn or so to build the Chicago Spire. And planning and zoning issues are resurfacing.
Of course, Kelleher is consumed with determination. If you relocate your family to another country, fight tooth and nail with Nama and Anglo and the IBRC, front up to a billionaire and put seven solid years into making something happen while veering between two time zones, losing tens of millions in the process, you're bound to feel a little headstrong about achieving your vision.
Back when the world was a different place, in 2006, development of the Chicago Spire started. Around 360 apartments out of 1,194 were sold off plans, mainly to wealthy Middle Eastern and Asian buyers, with Beanie Babies billionaire Ty Warner paying for a €28m penthouse.
By 2008 everything had changed. Development halted and never restarted.
Still, though, construction in the windy city is picking up and demand for high-end apartments is rising, according to the local press.
It would be taller than New York's One World Trade Centre building.
Atlas wants to build the Chicago Spire vision. That's "the only reason we're interested in this piece of dirt", said Ivankovich, in straight-shooting Chicagoese. "We're eager to stop paying lawyers and start paying architects."
Kelleher originally put almost €154m of his own cash into the Spire in the city where he spent a decade after leaving college. If he can't make it happen it probably can't be done.
The Irish taxpayer, it's important to note, via Anglo Irish Bank has forfeited millions to the unbuilt architectural dream.
This could be the year of the developer comeback: on St Patrick's Day, Michael O'Flynn's €1bn Nama loan book is expected to close sale. Paddy McKillen has bought back his Anglo Claridges debt. Sean Mulryan and Paddy Doherty are making their way out of Nama. It will be an interesting year.
Sunday Indo Business