Cut at Claridge’s – Independent.ie
It was the perfect mission – a drink on the terrace at Claridge’s, a short walk to dinner at the Connaught Hotel, a nightcap at the Blue Bar at the Berkeley and an upstairs room with a view of the square, where once sang the nightingales.
Even better, there was no imperative to write anything about it.
It was 2004 and a consortium led by financier Derek Quinlan had just purchased these three hotels (plus the Savoy) and proudly hung the tricolor above Mayfair’s golden mile.
As we drank champagne, I asked Quinlan where the money came from. He hesitated. The identity of the ‘Irish boys’ would remain Derek Quinlan’s secret.
But not for long.
What started with such promise has turned into a saga of money, power and recrimination, the latest episode of which is still playing out, after the last Irish link to the hotel chain was severed on April 1.
But on this mild May evening in London, all was softness and light.
As we finished our meal at The Connaught’s swish Angela Hartnett, Quinlan presented us with a printed history of the hotel. Some were thrown on the dinner table, but I asked him to sign mine as a memento of the occasion.
He did, with the following inscription:May God’s Will Be With Us Always, Derek Quinlan, May 10, 2004.”
God’s will was certainly with him when he made the deal to buy what was then the Savoy Group. But at this point it seems fair to say he was followed by a curse – as he and his main investor, secretive property developer Patrick Gerard McKillen Snr, popularly known as Paddy, had a heated argument. spectacular and acrimonious.
Eighteen years later, McKillen himself – along with his longtime associate Liam Cunningham – have been unceremoniously ousted from the board of directors of the companies that now own Claridge’s, the Connaught and the Berkeley, as well as hotels on the French Riviera and in Beverly Hills.
The sacking of the two Irish leaders points to a deep rift between McKillen, who ran the hotel group from his Hume Street office in Dublin, and the very wealthy Hamad al-Thani, of the reigning royal family of the Kingdom of Qatar.
It all started on March 6, 2004 after Ireland beat England 19-13 at Twickenham.
Quinlan, the ex-taxman who ran Quinlan Private – an investment firm for the rich and famous – from an office in Clyde Road, heard a whisper during the game that the Savoy Group was for sale, or ‘on the block’ as they say in real estate circles.
Within weeks he had formed a company called Coroin (Irish Crown) and agreed to pay £750m to buy it from US investment firm Blackstone.
It’s a deal that, like the purchase of Battersea Power Station by Johnny Ronan and Richard Barrett (2006), is remembered as one of the Celtic Tiger’s strong points. Money was cheap and plentiful, Seanie FitzPatrick wheelbarrowed it from the vaults of the Anglo Irish Bank and Irish investors roamed the most exclusive streets from London to New York, scooping up trophies.
Not a wisp of the gathering storm clouds was visible.
“Here, a group of Irishmen were buying up the bastion of the British establishment,” businessman Gerry Murphy would later say. vanity lounge magazine. “It was a spectacular and incredible dream.”
Quinlan and McKillen owned about 33% each of the new company, with other wealthy investors, including Top Shop owner Philip Green, making up the rest of the consortium.
But the tricolor hanging above Claridge’s door began to soften when the recession hit in 2009.
Quinlan – deeply in debt to the National Asset Management Agency (Nama) – left Ireland to live in Switzerland.
In January 2011, after buying Green’s stake in the hotels, Secrets Frederick and David Barclay reached an agreement with Quinlan: in exchange for a substantial loan, he ceded control of his stake to them, but above all did not l did not sell.
The Barclay twins owned the Ritz hotel on Piccadilly and that shrill voice of British conservatism, the The telegraph of the day. They were extremely wealthy, politically connected (Boris Johnson worked for them at the time) and notoriously low-profile, living in splendid isolation in Brecqhou, one of the Channel Islands, which they own.
McKillen said he had been put “in a terrible position” by Quinlan’s decision, as Barclays moved to take control of Coroin Ltd and its subsidiary, Maybourne Hotels, which owned the three prestigious London properties . (The Savoy had been sold within two years as part of the financial restructuring.)
But Belfast-born McKillen – who had started out fitting car exhausts and moved into property development when he bought Jervis Street Hospital in 1992 – wasn’t giving up the award without a fight.
Although he was friends with Bono and U2 and a major player in the Irish property scene, it was difficult to answer the question on many lips at the time: “Who is Paddy McKillen?” Even more intriguing to outsiders, Irish media had only one grainy black and white photo of him, taken decades earlier.
“Sit down. You’re lucky to come and meet me, otherwise you wouldn’t have entered this hotel,” one of the Barclays told McKillen when they first met. He had broken Ritz rules by not wearing no tie.
“When I sat down, I was fuming,” McKillen later said. vanity lounge – and he was even more furious after receiving a 30-minute rant from the twins about the Irish electorate changing their minds and voting to ratify the Lisbon Treaty.
The result of the dispute was a five-year three-way legal battle involving McKillen, the Barclays and Nama – who sold the loans she held in the hotel chain to the Barclays.
McKillen was desperately trying to prevent Barclays from using Quinlan’s stake to take control of the business, while processing hundreds of millions in loans he owed IRBC, the Anglo Irish’s public successor. Bank, now collapsed.
“I will never sell,” McKillen told the Irish Independent as the legal battle raged on. His bitterness with Quinlan, who originally brought him into the case, also surfaced when he said vanity lounge: “Quinlan is only interested in red wine and parties.”
“Paddy’s view of me says more about Paddy than me,” was Quinlan’s retort.
By 2015, McKillen had settled his IRBC debt, and his position was further strengthened when Barclays and Quinlan (now living in London) sold their stake in Constellation Hotels, owned by Qatar’s ruling al-Thani family. , for 1.3 billion euros.
Under new ownership, the hotels were managed by McKillen’s company, Hume Street Management Consultants. It paid its shareholders a dividend of 15.2 million euros in 2018 and 8 million euros last year. According to company documents, Hume Street, which employs eight people, took 5 million euros in fees in 2019 and 3.7 million euros last year for running the hotels.
But just over two weeks ago, at what would have been a board meeting they weren’t at, McKillen and Cunningham were fired and the Irish connection severed.
A person familiar with the company told the FinancialTimes: “He couldn’t have done better to expand and renovate the hotels.” The renovation budget for Claridge’s and Maybourne Beverly Hills was £362m (€437m).
According to financial documents, Coroin Ltd, which owns Claridge’s, lost £77million last year, and Maybourne, which along with Constellation owns the others, lost £4million, increasing its liabilities to £11million of pounds sterling.
But according to a London property watcher, such losses are just “small change” for the oil-rich al-Thani family.
What’s really central to the latest development is the 2015 settlement in which the Qataris bought the group. According to FinancialTimesConstellation Hotels agreed to deferred payment to McKillen for its 36% stake, which is due at the end of this year.
The recent upturn in the luxury hotel sector has led some to speculate that the London hotel group could now be worth around £5bn. Even after paying back the initial investment and renovation costs, it would leave the Irish property developer with a huge profit on his 18-year-old investment.
Observers of the London property market are skeptical of this valuation, with one describing it as “way above”.
The unceremonious dumping of McKillen and Cunningham could also be interpreted as the Qataris’ callous way of showing their displeasure regardless of the actual valuation.
McKillen, who turns 67 later this year, had previously indicated he was stepping away from day-to-day management of Riviera and Los Angeles properties, but who wouldn’t want to walk into Claridge’s and still be greeted as the savior of one of the most famous hotels in the world?
But McKillen also has a myriad of other businesses to manage, including Wintergreen Holdings, a Dublin company with more than €100 million in property assets.
While his son, Paddy Jnr, and Matt Ryan run the sprawling Press Up Hospitality group in Ireland, at the end of the accounts is an ominous one-line phrase, “The ultimate controlling party is Paddy McKillen Snr”, with Wintergreen the “ultimate owner”.
Press Up, in its latest accounts, indicates that due to Covid-19 it was able to successfully waive all of its financial commitments as of May 31, 2020, “as well as agreeing to deferrals of all capital payments from May 20, 2020. March 2020 to December 2021”.
Neither McKillen nor Liam Cunningham were available for comment when contacted last week.
Whatever Paddy McKillen’s long-term plans, it would appear that even he – a seasoned, hard-headed businessman – was shocked by the sudden rift, with the Al-Thani clan appearing to have got his retaliation first.