Wednesday 26 July 2017

I owe €200m -- and feel like I have been liberated

How are Ireland's biggest property barons surviving in the crash? Kim Bielenberg gets an insider's account of life beyond the bubble

When a man owes €200m to the banks it seems only proper to buy him his soup for lunch. Simon Kelly estimates that he was worth a cool €300m at the height of the boom.

At one time, he was among the richest young men in Ireland. He could buy his weight in gold and virtually anything he wanted, and his father Paddy was reckoned to be a billionaire. His family's empire took in ski and golf resorts, pubs, office blocks, supermarkets and hotels

But now the 38-year-old tells me with a certain chutzpah that he and his family are totally bust. They could not be more broke in fact.

In the boom, some plutocrats may have boasted about their wealth. Now anyone who is anybody owes at least €100m, and the Kelly family are close to the top of the broke list.

Even if he found a decent job on three times the average industrial wage, it would take Simon Kelly 2000 years to repay his debts. His father is reckoned to owe up to €700m to one bank -- over half the total amount Ireland is currently lending to Greece.

In one of his purchases the younger Kelly and his partners shelled out €30m on the Thomas Read chain of pubs. Now, on a Tuesday afternoon in a bar on Store Street in the centre of Dublin, I am coughing up €6.95 for his seafood chowder. I am only too happy to help.

Chatting amiably as he wolfs down the soup, he seems remarkably unconcerned by his spot of misfortune. He now describes himself as a former property developer and consultant. He is in the middle of writing a book.

"I feel liberated to walk away from it to be honest. When you own that amount of assets, it feels like the assets own you. I was in property for 15 years. Now I can do something I really want to do.''

The chairman of NAMA, Frank Daly, showed signs of irritation recently when he said some of the country's top developers were still living boom-time lifestyles despite the collapse of their property empires.

"Certainly not all of them have yet abandoned the extravagant mindset of the 2003-2007 era," he said during his first public appearance since Finance Minister Brian Lenihan appointed him chairman in December.

Daly's comments echoed those of NAMA chief executive Brendan McDonagh, who told a Dail committee it was his strong view that indebted developers "displaying obvious wealth (are) almost in defiance of us".

Simon Kelly, whose family's property portfolio is about to enter NAMA, is happy to face the music: "We were among the first to stand up and say we were bust and we were criticised for it at the time. But what else you can you do?''

He accepts that some of Ireland's property developers still don't realise that the great game is over.

"They think they are still the princes and the kings. I called into the office of a leading developer, or "project facilitator" as Nama now refers to them. I was still walking past shining Porsches and brushing off big egos.

"Some of them still have delusions that things will get better again, but it's not going to happen."

Kelly says the banks are often not interested in making developers go bankrupt and taking away their cars and houses. They may want it to look that way, because of the media, but they are not putting builders under too much pressure.

"The banks don't want builders to go bankrupt because then they lose control of their assets. And there is no point in them seizing the cars, because they are just a drop in ocean when compared with the debt.''

So has he himself actually suffered directly as a result of the crash?

He still lives in the same house in Dunganstown, Co Wicklow, with his wife Joanna and five children. And there is no immediate danger that he will be put out of it.

"My house is in my wife's name. There are reports that developers are transferring homes into their wives' names. Any smart developer would have done that right from the start.''

His father Paddy and mother Maureen have had to move out of their palatial residence, Clonmore, in Shrewsbury Road. In January, removal vans were seen taking their possessions away. They now live in rented accommodation in nearby Morehampton Road. Their house is now leased to the Chinese Embassy.

"I think it suited them to move out anyway, because the house was big, and we have all moved away.''

"We have been through financial troubles before. When I was 18 my father lost everything, but we bounced back from it.''

Simon Kelly says that he did not live it up during the boom. So, the bust does not make a huge difference to him. "I am still driving the same '01 Land Rover that I always drove,'' he says, before adding with tongue in cheek, "It's ideal for running over my creditors.''

At one point he breaks of the conversation and tells a mobile-phone caller, "Don't worry. The dog wouldn't bite a banker.''

He insists that he was never been impressed by the baubles of wealth.

"I would hate to have my own helicopter. I hired one a couple of times. One time I took one to Ashford Castle and it made me feel sick. You are better off taking a car.''

Over lunch I am intrigued by the notion that he can find work as a consultant. Who would possibly seek expert advice from a man who owes €200m?

"People look to me for advice. You might have someone who owes €15m and they want to know how to deal with the situation.''

Simon tells them: "I am bust, you are bust. Don't let the bank blame you for it. This was a breakdown in the system involving developers, bankers and politicians.''

While the Kellys seem to have taken a philosophical approach to their empire's demise, it is clear that many other developers have been broken psychologically by it, and will probably never recover.

Simon Kelly talks of at least one of the leading developers in the country who has had a mental breakdown. And some more minor players, most notably Patrick Rocca, have taken their own lives. According to the Irish Property Council, a representative body for builders, at least 29 suicides can be linked to financial despair.

The solicitor Gerald Kean, who knows many of the top developers, says: "They react in different ways to it. Some are like scalded cats in the corner and just don't know what to do.

"Some are going abroad to places like Africa to try to make money and repay their debts, while others will just bluff their way through it.''

Outward displays of wealth, such as Johnny Ronan's jaunt to Morocco in a private jet with Rosanna Davison, are now frowned upon.

"The big charity dinners and parties are not happening as much, and people are not going around in helicopters,'' says Kean. "At Punchestown two years ago they had to have a special control tower because there were about 175 helicopters. This year there were only four or five.''

They may be retreating to their Ballsbridge mansions, but some of the developers are still working hard.

An acquaintance of Bernard McNamara, the builder who admitted earlier this year that he was broke, said: "He is just putting his head down and doing whatever he can. He is working harder than ever.''

So what does the future hold for Simon Kelly as he faces up to the future. He is undaunted by his situation and, surprisingly perhaps, would not rule out a career in politics. Who knows? A NAMA party may yet have a future.

Irish Independent

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