Tuesday 27 June 2017

Siobhan Creaton: Developers bid to Trump NAMA with miracle comebacks

Siobhan Creaton

IT'S hard to imagine any of Ireland's distressed property developers being honoured by our universities for their business acumen and entrepreneurial vision any time soon, but it is not impossible that some may yet be feted for staging a spectacular comeback.

On Friday, the Robert Gordon University in Aberdeen, Scotland, awarded its highest honour to the king of bling, Donald Trump, in celebration of his business style and success. The fact that he is investing almost €900m to create what he claims will be the world's "greatest golf club" at Menie, a few miles away, has also impressed the academics.

Its decision is a controversial one within Scotland and has evoked fury from those opposed to Trump's brand of development. The "Tripping up Trump" organisation, representing residents living close by, suggested "an ASBO" would be a more fitting award for the tycoon who is riding roughshod over the Menie Estate homeowners to achieve his vision.

Trump's journey is a compelling tale. He has seen it all. He has survived booms and busts; diced with debt restructuring, junk bonds and bankruptcy; and emerged with a healthy fortune, not to mention a very full head of hair. Indeed, he has made many millions from his books and his reality television show, 'The Apprentice' -- selling his brand of survival and success.

His experience may provide food for thought for Ireland's distressed property developers and even offer a few survival tips. Brendan McDonagh and his troops at NAMA could do worse than read some of the publicity-crazed mogul's books about his exploits to prepare themselves for the inevitable bitter battles ahead with our kings of bricks and mortar.

Trump, who characterised the worst of 1980s' extravagance and greed, wowed the world with his megabucks deals before coming a cropper when the US real estate market collapsed in the 1990s.

Less than 10 years ago, 'The Donald' was a busted flush. He personally owed about $900m and his companies' debts ran into billions. His lenders took his favourite toys away, including his yacht, and put him on a tight leash. They maintained strict credit controls and forced him to meet huge debt repayments over many years. To default would mean losing nearly all of his remaining empire.

He was down but still swaggering. "You'll never see me sitting in the corner sucking my thumb," he said. The Trump name would come back stronger and "hotter" than ever, he promised.

His trick was to buy time. In the following years he managed to shake off chunks of his debt -- forcing lenders to write-off millions, and at the same time he hung on to enough properties to give him a good shot at making a comeback when conditions improved.

Over time, his lenders took the view that they stood a better chance of recouping their debts by letting Trump do what he was best at -- developing property. He avoided personal bankruptcy because they had nothing to gain from a prolonged battle over his distressed and devalued assets. The Trump brand would only add value to his businesses. As one banker remarked: "He was worth more to us alive than dead."

It didn't take the once toxic Trump long to become "bankable" again. New loan contracts were more tightly written and the bankers were able to justify getting back into business with him using the immortal words: "This time it's different."

As NAMA limbers up to take on the unco-operative developers, it is too early to predict which of Ireland's big developers might be as successful as Trump in surviving this crash. He has little to teach the likes of Bernard McNamara and Paddy Kelly who have gone bust before and made spectacular come-backs, only to lose it all again. Some will inevitably stage a comeback but will they have as much hair left as 'The Donald'?

Irish Independent

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