Hibernia Reit dragged into Dunne bankruptcy battle in America
Email sent to Nama in 2011 about Sean Dunne's alleged activities in the US is now under scrutiny, writes Ronald Quinlan
Hibernia Reit chief executive Kevin Nowlan's former role as the Nama portfolio manager tasked with managing the agency's relations with Sean Dunne is set to come under the spotlight as part of the developer's US bankruptcy proceedings.
The events leading up to the establishment of Hibernia Reit could also come in for detailed scrutiny following a decision by Dunne's wife, Gayle Killilea, to notify the courts in Connecticut of her intention to ask that Frank Kenny be subpoenaed to provide testimony in her husband's case.
Kenny is a senior advisor to Hibernia Reit which, since its 2013 flotation on the Dublin and London stock exchanges, has become one of the country's most significant property players.
Key to the company's successful strategy has been its investment in and development of a string of prime properties in Dublin's CBD (Central Business District), an area where Dunne and other major developers had concentrated their activities prior to the Crash and the transfer of their companies' multimillion euro loans into Nama.
In a formal 'Notice of Issuance' filed in the US bankruptcy court in Connecticut last Thursday, Dunne's wife stated her intention to request that Kenny testify at a deposition in Dunne's bankruptcy, and to provide certain documents to her.
Specifically, lawyers acting for Killilea have sought all documents, communications and correspondence that mention an email Kenny sent to Hibernia Reit ceo Kevin Nowlan on July 17, 2011, at a time when Nowlan was still working as a portfolio manager for Nama and handling the affairs of her husband.
In that email - a copy of which is appended to the papers submitted to the court - Kenny told Nowlan that: "I hear that our friend SD [Sean Dunne] is bidding for a [$]12m site on Long Island Sound in Rye, NY, to build two or three houses. This would be a third project - got to be running a $20/30m residential business at this point. Tough on those left unpaid in Dublin!!"
While it remains unclear what response, if any, Nowlan gave to Kenny's email, Nama moved against Dunne two days later on the morning of Tuesday, July 19, 2011. In a series of letters delivered by hand and by fax just before 11am that day, the agency demanded the repayment of loans amounting to €296.7m by 5pm on July 21 - just 53 hours later.
Elsewhere in her submission to the US bankruptcy court, Killilea has sought "all documents, communications and correspondence that concern, mention, were sent to, or were received from: Sean Dunne, Nama, Hibernia Reit or Kevin Nowlan. The former journalist turned property developer has also sought the delivery of copies of any documents, communications or correspondence that might exist relating to Sean Dunne's former commercial property assets including: Riverside IV; a prime site at City Quay; Hume House and AIB bank headquarters in Ballsbridge; 72-80 North Wall Quay; 76 Sir John Rogerson's Quay, and the former Jury's and Berkeley Court hotel lands in Ballsbridge.
Killilea has also looked for the production of copies of any correspondence or communications relating to Sean Dunne's former assets between Nama, Hibernia Reit or Kevin Nowlan with a number of parties. Notably, those parties include US private equity giants Cerberus, Blackstone and Oak Tree Capital. All three companies acquired a significant number of prime properties in Dublin's central business district - where Dunne's portfolio was largely concentrated - from Nama and other financial institutions at knockdown prices in the depths of the recession.
While it remains to be seen if Frank Kenny, a native of Dublin and a contemporary of Sean Dunne's as a student at Bolton Street DIT, will seek to have Killilea's subpoena quashed or modified by the court, she is within her rights, to call for him to testify and produce documents. Under US federal and state rules governing bankruptcy proceedings, an individual may be ordered by subpoena to attend a trial, hearing or deposition if it takes place within 100 miles of where they live, work or regularly conduct their business. The same condition applies in relation to demands for the production of documents or records.
In the case of Frank Kenny, his New York home is located less than 10 miles from the offices of Killilea's lawyers in Stamford Connecticut, where the proposed deposition would take place. A spokesman for Hibernia Reit declined to comment on the matter when contacted by the Sunday Independent.
Apart from Gayle Killilea and Sean Dunne's efforts to pursue Hibernia Reit, the company's activities have come in for scrutiny by Independent TD Mick Wallace. Last October, he used Dail privilege to highlight representations made over the course of two years by WK Nowlan, the company founded by Hibernia CEO Kevin Nowlan's father, Bill, to the Department of Finance in relation to the introduction of Reits in Ireland.
Wallace said: "The Department of Finance eventually ceded to this lobbying in 2013 by establishing the Reits model." The Wexford politician also highlighted an interview Kevin Nowlan gave in 2015 to economist David McWilliams for the RTE documentary, Ireland's Great Wealth Divide.
"He [Kevin Nowlan] said Ireland became an extraordinary place for a moment because virtually everything was for sale. He also said a lot of property for sale, by receiver or whatever, ends up in the Irish Times and Irish Independent, but they know enough people in Dublin to be able to go buy properties in Dublin without having to go to auction or onto the market. He stated they had done 18 deals, 16 of which were done off-market. These are the type of guys who now control much of the property market in Dublin, and it raises concerns about how we do big business in Ireland," said Wallace.
Sunday Indo Business