Derek Quinlan ‘did not forsee property crash’ until 2008

Irish financier Derek Quinlan did not believe there would be a property crash in Ireland until Lehman Brothers collapsed in September 2008.

Speaking at the Oireachtas banking inquiry today, Mr Quinlan, who led Irish investment group Quinlan Private during the property bubble years, said: "I genuinely did not believe that the market was in danger of collapse until I heard about the collapse of Lehman Brothers."

Mr Quinlan said he did not realise that Irish banks were undertaking long term funding to customers using short term borrowing of their own.

“This model was clearly not sustainable,” he said. “Had I known this at the time I certainly would not have invested in Irish property.”

He said it is now clear that the growth in the Irish property market in the years up to the crash in 2008 was “unsustainable”.

Mr Quinlan said he was “deeply saddened” by how the property crash had affected the economy and the “unprecedented and devastating impact” it has had on the country.

Mr Quinlan said he always invested in quality commercial properties in “fine locations”. His four key themes for investing were location, timing, liquidity and confidence.

Mr Quinlan said that with some limited exceptions, from 2002-2008 he was not personally involved in dealing with financial institutions to obtain financing for any Quinlan Private project.

He said Anglo Irish Bank was Quinlan Private’s principal financial institution but it also had significant relationships with a number of other banks based in Ireland together with international banks including Santander, RBS, Bank of Scotland and German banks.

Its property assets under management grew from €858 million in 2001 to

€4.2 billion in 2005. Some €3.2 billion of this was held in hotel and “mixed assets”.

He retired in the summer of 2009 to concentrate on the deleveraging his investment portfolio and on advice from KPMG, he moved abroad to maximise the returns to his creditor banks.

In his opening statement, Mr Quinlan said he has an “on-going private commercial relationship with Nama” and it would not be “appropriate” to comment on the institution at this time.

‘Regrets’

Mr Quinlan said he has a “number of regrets” about the property crash.

“I’m not living in Ireland. Some of my children live here. It’s not by choice and I miss Ireland, every day.”

Mr Quinlan left Ireland in 2009 when he was 61. He said it was a “very painful move” as he had a young family here. The move was designed to maximise the return for his creditor banks and was based on advice from KPMG.

Remaining in Ireland would have resulted in “substantial tax to be paid on gains”, he added. Mr Quinlan initially moved to Switzerland.

Mr Quinlan told the committee that he does not have a “precise recollection” of contributing directly to any Irish politician from2002 to 2008.

He said Quinlan Private would have taken seats at dinners and golf outings held by Fianna Fáil, Fine Gael and the PDs.

He said he knew “one or two politicians” on a “casual basis”. “We didn’t look for any political favours, good bad or indifferent,” he said. “I have never lobbied any politician in my life.”

His first investment was €5 million in The Square shopping centre in Tallaght in 1990, with a loan from Bank of Ireland. At the time he thought Anglo was “too expensive”.

As the years went by and he made more and more investments, banks, including overseas ones, began to compete for his business.

In 2006, some 48 per cent of Quinlan Private’s assets were located in the UK and 36 per cent in Ireland.

That year, it opened an office in New York, with current US vice president Joe Biden and former New York governor Eliot Spitzer as the guests of honour.

He said Quinlan Private’s clients were investing €10 million or more per head. Mr Quinlan recounted bringing the Four Seasons hotel group to Dublin, which he said was a major boost to the hospitality sector here. “It set new standards,” he said.

When asked by Joe Higgins if Ireland had suffered a property bubble, Mr Quinlan said: “In hindsight, there’s no doubt about it that prices in Ireland fell more than anywhere else.”

Mr Quinlan was not sure why this was the case. The financier had expected a “soft landing” for the property market in Ireland.

“Obviously, in hindsight, we didn’t have a soft landing, there was devastation.”