It's been a year since Derek Quinlan, Ireland's best known property investor, left his hugely expensive mansion on Cap Ferrat, the exclusive home to the world's rich and famous, near Nice, to rent in the small Swiss town of Epalinges, seven kilometres from Lausanne.
On the Cote d'Azur, local property agents say his mansion and estate, called La Villa Carriere, although not for sale has been quietly put on the rental market. Quinlan had expensively bought into Cap Ferrat just weeks before the global property bubble burst over pricey properties on Dublin's Shrewsbury Road - where he owns three houses - and the most exclusive villas on the Cote d'Azur. He now faces huge financing costs for the loans.
Leading property specialists on the peninsula say that although properties on Cap Ferrat continue to sell - an unidentified Irish owner is said to have completed the sale of an exclusive villa in recent days - the prices of properties on the cape bought in 2006 would have fallen by as much as 50% since then.
The Sunday Tribune has obtained company documents detailing Quinlan's purchase of La Carriere at the height of the property boom. Other publicly available documents relate the huge mortgages that AIB advanced him to buy the estate.
Email correspondence seen by the Sunday Tribune between Quinlan's advisers show that the mortgage and other charges AIB held over the villa and estate ballooned from €30m in early 2006 to €48m in 2008 when Quinlan started to refinance the property with three loans from the Monaco branch of Barclays Bank. By last year, the mortgages and other liabilities held by the company that controls La Carriere totalled almost €64m.
AIB's credit risk committee could not have chosen a worse time to sanction loans for an individual to buy personal property on the Cote D'Azur. The documents show for the first time the extent of the planning difficulties Quinlan faced just months after purchasing the estate. They also show the huge interest rates Quinlan faced on mortgages from new lenders Barclays linked to the Cap Ferrat property as the global crisis escalated.
On 6 January 2006, Quinlan, through a French company of which he owned a 99.9% stake, agreed to buy La Carriere, reputedly one of the finest properties and lands on Cap Ferrat. The Grand Hotel is only a few minutes' walk away and estate plans show the property includes the main villa, a one-storey housekeeper's residence, a garage with pigeon loft, a pavilion to greet guests, a green house, swimming pool, extensive parklands and pleasure gardens that stretch down to the sea.
In an agreement signed in April last year, Quinlan took full control of the company linked to the estate after buying out the 0.1% share held by Nathalie Desbiens, wife of Mark Kenny, a financial associate of his, for a "symbolic" payment of one euro. These documents also reveal the extent of the planning dispute, believed to be still unresolved, Quinlan faced with the Cap Ferrat authorities.
The previous owner had been given what the documents describe as a "temporary" five-year licence (to 2009) for "occupation" of the so-called "domaine public maritime", covering an extensive part of the estate. Stretching to 167sq m, the lands disputed by the planners include a 12m by 5m swimming pool, a 10m by 2.5m solarium, a stone wall and a floating pontoon on the inlet for use in the summer months only.
But on 18 December 2006, less than a year after Quinlan's purchase, the planners refused to transfer the existing permission, granted two years earlier to the previous owner for that part of the estate. The documents do not say why the five-year licence was prematurely revoked.
This unfortunate planning mess led to advisers to Quinlan communicating on 16 April 2008 that the company that controlled the villa and lands was valued at €65m. The documents outline in great detail the history of the private ownership of the villa and lands going back to 1899. They also lay out the history of the mortgage charges to the company controlled by Quinlan.
In January 2006, Quinlan bought the villa and lands through his 99.9%-controlled company, financed with a main two-year mortgage loan of €30m from AIB.
Early the following month, the bank recorded its charge against the property at the official mortgage office in Nice.
Records show the mortgage office recorded further loans and charges by AIB against the property. On 18 September 2007, AIB advanced Quinlan €8m in another "conventional" 10-year mortgage loan and, on 17 July 2008, the bank loaned out a further €10m over a term of nine years.
The public filings show that in 2008 Quinlan had started refinancing the villa and lands with huge new loans secured on the property from Barclays in Monaco. By August, Barclays had refinanced the property, with three loans to Quinlan, now the new sole owner, totalling over €56.25m. Email correspondence between his advisers in April last year show that the Quinlan company that owned the estate faced a further €9.9m liability from money in an account that had not been reimbursed at the end of 2007.
Records show that Quinlan agreed to pay Barclays for the main €48m refinance loan an interest rate of 1.5% above the three-month Euribor money market rate. For "purely reference reasons", the documents record that on the first day of the contract the three-month Euribor rate was trading at 4.96%, and that in late August 2008, as the world money markets went into a spin, Quinlan was paying quarterly instalments based on an annual interest rate of 6.4%.
Documents show that the second loan from Barclays, for €8m, was earmarked for development work on the estate. This five-year loan, also with quarterly repayment instalments, was based on a 1.5% margin above the prevailing Euro overnight bank rate.
On the first day of the loan contract, Quinlan was paying an effective annual interest rate of 5.7%.
The third loan from Barclays of €280,000 was earmarked to pay the expenses that arose in raising the first two loans. Public filings in Nice suggest that this short-term loan, which it was agreed would be fully repaid on New Year's Eve last year, would cost an effective annual rate of 8.39% if the huge spike in money-market rates persisted through 2008.
The documents show that by early last year Quinlan's company, as outright owner of the villa and estate, owed €63.8m.
On 16 April last year, as Quinlan and Desbiens executed the share transfer, the villa and estate was valued on the company's books at €65m.
There may be a further painful financial twist for Quinlan.
The documents detail an annual 3% property tax payable by property owners based on the market value of the property. The property tax alone on La Carriere on Cap Ferrat may cost Quinlan almost €2m each year.