Phoenicia Hotel owner waits for Dutch court over loans’ debacle

Property group that purchased loans securing hotel purchase from Irish government asset company, wants to walk away from €19 million deal.

The Phoenicia Hotel
The Phoenicia Hotel

A verdict from a court in Amsterdam is expected within weeks, on the property group that purchased loans securing the five-star Phoenicia Hotel in Floriana, can walk away from the deal.

Irish billionaire Paddy Kelly bought the hotel in a consortium with five other investors, but Scottish property group Hazledene wants to walk away from the deal.

The €21 million loan secured on the hotel was originally publicly sold by government-owned NAMA - Ireland's National Asset Management Agency, which was created in 2009 in response to the Irish financial crisis and the deflation of the property bubble - to Hazledene, a property company owned by Scottish developer Mark Shaw.

It recently offered to release the consortium from their personal guarantees, if they handed up the hotel and walked away, the Irish Times reported, but Kelly was the sole dissenter among the group and has asked a Netherlands court, where the consortium was incorporated, to rule on whether the deal can be accepted without his permission.

"I love the place. I come to Malta about six times a year. Costs are much lower than back in Ireland, and a G&T is only €2.50," Kelly has said.

He also said he understands why the other investors want to walk away: "It's a frightening experience [being involved with NAMA]. I understand why people don't want to become entrenched in the whole thing. But I want to stay involved. There is no harm in asking."

In December 2012, loans underpinning the purchase of the Phoenicia Hotel, were sold by NAMA.

The original consortium of investors in the hotel in 2007 was led by Paddy Kelly but is understood to have included Luan Cuffe, Pearse Farrell and Alastair Tidey. NAMA acquired the loans from the Irish Nationwide Building Society.

A part of the consortium later attempted to buy the loans from NAMA, but the agency sell assets back to the original borrowers where the borrower is in default.

NAMA decided to sell the loans secured on the hotel in a public process to the Scottish property group Hazledene for €19 million, a 10% on the original €21 million - leaving taxpayers €2 million short on the deal.