independent

Monday 21 April 2014

Quinlan loses control of €1.9bn Santander HQ

Huge setback for financier as rent worth €2.65bn

FINANCIER Derek Quinlan has lost control of one of Europe's biggest buildings, which he acquired with a partner for €1.9bn in 2008.

Robert Tchenguiz, a colourful property investor who grew up in Iran, is backed in the complex wrangle for control of the building, which is the headquarters of Banco Santander in Madrid, by an Abu Dhabi investment fund called Aabar.

Tchenguiz and Aabar wrested control of the 11 million sq ft building recently when a Dutch court ruled that they had the right to acquire some of the debt associated with the building.

They have spent about €200m buying a junior loan on the property which gives control of its future. This "controlling" loan was sold off by Royal Bank of Scotland when it went into default.

Quinlan and his business partner Glenn Maud had tabled a bid to buy the entire building, backed by China International Capital Corporation, an investment bank set up by Morgan Stanley and Chinese banks, along with American private equity fund Global Asset Capital to fight off Tchenguiz and Aabar.

However, the decision by the Dutch court has scotched their ability to make alternative offers for the building in which they remain shareholders but are no longer in control.

Tchenguiz and Aabar are now calling the shots on the refinancing of the building's senior debt of €1.55bn in a move intended to leave them in control.

Loss of control of the building is a major setback for Quinlan and Maud. Santander has signed a 40-year lease for its headquarters, of which more than 35 years is left to run, which would deliver a rent roll of at least €2.65bn over its lifespan.

Robert and his brother Vincent Tchenguiz endured in the last 18 months an investigation by the Serious Fraud Office in the UK over their alleged dealings with Kaupthing, the collapsed Icelandic bank. The SFO, however, later dropped its case and both brothers said earlier this month they planned to sue it for substantial damages.

Meanwhile, Quinlan and associated syndicates with other investors were Nama's biggest clients with debts of €3bn when the state property agency was set up in 2009.

However he has since reduced his personal debts from €380m to €230m while his so-called "corporate debts," to Nama and Irish banks has fallen from €3.2bn to just over €1 bn. Nama last year appointed receivers to the various companies or entities which control his personal borrowing. It continues to work with various property syndicates he has shareholdings in but is no longer in charge of.

Quinlan's worst investments, the Irish Glass Bottle site in Ringsend in Dublin and the Georgia Club, a golf resort in Georgia in the US, are heavily underwater and will almost certainly eventually lead to substantial losses for Nama. Quinlan received €2m in loans in 2010 from four Irish businessmen, including Denis O'Brien, the telecoms entrepeneur, to fund what Nama called "day-to-day expenses".

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