When Johnny met NAMA
Decline of the colourful developer Ronan continues as NAMA seeks administrator for Battersea Power Station site
This week's decision by NAMA to seek to appoint an administrator to the Battersea Power Station site marks the latest stage in the decline of Johnny Ronan, perhaps the most colourful character to emerge from the Irish property boom.
On Wednesday, NAMA and UK bank Lloyds applied to the High Court in London seeking a date for a hearing to appoint an administrator, similar to a receiver in Irish insolvency law, to the Battersea Power Station site. The total debt owed on the site is £330m (€385m), of which £130m is owed to NAMA.
The major shareholder of the 38-acre Battersea site, which occupies a prime location on the north bank of the River Thames, is Real Estate Opportunities (REO), with a 54pc stake. REO in turn is 50.7pc owned by Treasury Holdings, the Irish property company founded by Johnny Ronan and his business partner Richard Barrett.
The Battersea site has had a chequered history. Power generation ceased in 1983 and since then it has defeated all attempts at redevelopment. The big problem is the power station structure, the largest brick-built building in the UK with four chimney stacks, each of which is 338ft high.
In an ideal world the site would be cleared. Unfortunately such is the attachment of our nearest neighbours to old buildings, even monstrosities such as Battersea Power Station, that a preservation order has been slapped on the structure. This need to preserve the building makes any redevelopment of the site far more difficult and expensive.
Further complicating matters is the requirement that any developer of the site must contribute to an extension of the London Underground. It has been estimated that this obligation would add at least another £200m to the cost of developing the site.
That didn't deter Johnny Ronan, the son of a pig farmer from Carrick-on-Suir in Co Tipperary. In November 2006 REO acquired the site for £400m. In 2008 REO announced plans for an ambitious £4bn redevelopment of the site. Designed by Uruguayan-born 'starchitect' Rafael ViÃ±oly, it included such features as an 'eco dome', a new biomass power station, a shopping mall and 3,200 new homes.
Wandsworth Council gave the project planning consent in November 2010 and construction work on the site was scheduled to begin 2011 with work due to be completed in 2020.
It was already too late. Back in Ireland events had already overtaken Treasury. The Irish government was forced to unconditionally guarantee the deposits of the Irish-owned banks at the end of September 2008. Less than seven months later, in April 2009, the government announced the creation of a state 'bad bank' -- NAMA -- which would eventually be forced to purchase dud property loans with a nominal value in excess of €70bn from the Irish banks.
As one of the largest Irish property developers a large proportion of Treasury's loans ended up with NAMA, with €1.4bn of its total borrowings of €2.7bn being purchased by the new organisation.
All of which boded ill for Johnny on both a business and personal level.
During the boom years Johnny reverted to a bachelor lifestyle and was rarely seen in public without at least one gorgeous model on his arm. What, wondered many observers, did these lovelies see in the short, fat, middle-aged, multimillionaire property developer?
With his private jet to ferry him and his companions around the world and a €600,000 luxury Maybach limousine for trips into town, Johnny kept a permanent table at the uber-trendy Town Bar & Grill Restaurant, which he owned, and moved into an opulent mansion on Dublin's Burlington Road.
The modern structure, which cost several million euro to construct, was painted a bright pink and was quickly dubbed 'Saddam's Palace' by wits.
While such a high-profile luxury lifestyle may have been par for the course in the boom years, it was a different story when NAMA took over Treasury's loans.
NAMA's chairman, former Revenue Commissioners boss Frank Daly, was known to take a dim, some would even say puritanical, view of developers who continued to live high on the hog. Johnny's personal and business lives collided in spectacular fashion in March 2010 when he and former Miss World Rosanna Davison took off in his private jet to the Moroccan resort of Marrakech for a few days of well-deserved spring sunshine. This did not go down well with model and TV3 presenter Glenda Gilson.
The pair had what the diplomatic communiques of a bygone era would have described as a "full and frank exchange of views" outside McSorley's pub in Ranelagh, details of which quickly found their way into the newspapers.
The result was a full-blown media frenzy with Johnny making the transition from the business pages to the gossip columns. What might have been dismissed as a seven-day wonder in the good old days was altogether more serious now that NAMA was calling the shots.
The sight of one of the country's major property developers, one who effectively owed more than a €1bn to the taxpayer, behaving like a lovelorn teenager was no longer acceptable in the new age of austerity.
And it wasn't just NAMA that was annoyed by his antics. There were also unconfirmed reports that the 'Rumble in Ranelagh' had threatened to undermine relations between Treasury and Bank of Ireland, one of its main creditor banks.
A few days later it was announced that Johnny would be "stepping aside temporarily" from his duties at Treasury. For the next six months Johnny adopted an uncharacteristically low profile. In fact he wasn't seen in public again until September 2010 when the €500m National Convention Centre, which had been developed by Treasury, was officially opened.
However, it was very much a chastened Johnny who appeared at the opening ceremony. The private jet and the Maybach had been sacrificed in order to appease NAMA and the formerly plump Johnny was noticeably lighter with a figure that was almost svelte.
'Friends' briefed selected journalists that Johnny was a reformed character who had given up the booze and embraced a healthy lifestyle with plenty of exercise and sensible dieting.
Further proof that Johnny had turned over a new leaf was the fact that, instead of the models of yore, he was accompanied to the opening ceremony by his wife Mary. This was the first time that the couple had been seen together in public for many years.
Will Johnny's new, clean-living lifestyle be enough to convince NAMA? Unlike many of its rivals Treasury has a slew of top-class assets, which -- apart from the afore-mentioned National Convention Centre and the Battersea site -- include the Treasury Building, one of whose tenants is NAMA, and several properties in Shanghai and Beijing.
Unfortunately, unlike Mr Barrett, who seems to have given his bankers few if any personal guarantees, Johnny seems to have been less cautious in this regard. If Johnny does comes to grief it will ultimately be these guarantees rather than his previously colourful lifestyle which will prove to have been his undoing.