The wise building ways of Paddy the philosopher: ThePost.ie


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The wise building ways of Paddy the philosopher
Sunday, November 16, 2003

PaddyKellyprofile By Neil Callanan

Name : Paddy Kelly. Age : 59. Appearance : snow-haired in casual suits. Newsworthiness : involved in developments in Dublin, Europe and the US worth over €1 billion.

Paddy Kelly has returned from a trip to Australia courtesy of the leading legal firm, BCM Hanby Wallace, one of the developer's. Despite his ten-day absence, Kelly's range of interests meant his name couldn't be kept out of the papers.The Laois-born developer has taken a 40 per cent stake in the former Independent News & Media (INM) building on Middle Abbey Street in Dublin, with retailer Arnotts taking the remainder.

It wasn't his first time looking at the area. A few years ago, he and a number of partners had looked at buying Arnotts in its entirety, but "knew it couldn't happen" because the owners were not interested in selling.

Having met Arnotts owner Richard Nesbitt for lunch prior to the tender for the INM building, Kelly felt they could work together. While he was watching the rugby in Australia, David Kelly (no relation), Niall McFadden and Paddy's son, Simon, put the deal together.

"You're left wondering how he does it," said one Dublin property agent. "He's involved in a humungous amount of deals. I don't know how he can keep all the balls up in the air."

Kelly believes that partnerships and an ability to compromise are the answer. One of his favourite mottos is `Team: Together each of us achieves more.' He credits growing up in a family of eight boys for his ability to sustain partnerships. "I was used to the compromises of a big family," he said.

His partners include developers John Flynn, Niall J Mellon, the McCormack family, Pat Ryan, car salesman Joe Linders, his son Simon and hotelier Brendan Curtis. "They are all free agents. If they do their own projects, there's no ill feeling," he said.

If property was liquid, Kelly and his siblings would have it running through their veins. Great-grandfather Patrick Kelly, a tenant farmer from Ballymullen, Abbeyleix, was a member of the Land League. He was sentenced to five years in penal servitude after being caught erecting a Land League boycott poster approved by Charles Stewart Parnell. The family were evicted from the farm.

Kelly's grandfather, Michael, rose to become the county engineer in Laois despite having to attend numerous interviews for the job because he was the son of a convicted felon. "I'd oftenthink of his persistence when I am dealing with banks," said Kelly.

His father, Christopher, moved to Dublin, sold property there to buy land in the country and eventually began building houses.

"You would never go hungry if you own a few acres," his father used to say. Kelly's brothers are all property investors and three of them are developers in their own right.

Most of the family's projects are operated as independent companies, with Redquartz being the family's holding company and Prem Group, an amalgamation of partners.

Prem Group controls the Choice Hotels brand in Ireland, business centres in Dublin and Belfast and four aparthotels in Britain. It is now the European partner of Cendant, a US firm that controls companies such as car rental firm Avis and Galileo, which produced the booking system used by travel agents. It's also the world's largest franchisor of real estate brokerages, owning brands such as Century 21 and ERA. Capitalised at $20 billion, Cendant has annual profits of $1.4 billion.

Earlier this year, the Prem Group took a stake in the Tulfarris Hotel and Golf Resort in Wicklow. While many developers were interested in the site, owner Jim Hayes and his wife approached Kelly, who took a stake and brought in other partners.

Kelly is considering a major upgrade of the premises and hopes to attract business clients. A golf centre of excellence will be added and there are also plans for a wellbeing centre, a spa, a creche and a gym in the hotel.The hotel will eventually be upgraded to suites and rebranded as a Clarion.

Other hotel projects continue to roll out. In Cork,Choice Hotels will operate a 193-bedroom Clarion hotel on Lavitts Quay, while a 220-bedroom Quality Hotel will be built on the southside quays of Dublin. Kelly also wants to open a Clarion hotel at Dublin Airport.

Nicknamed Paddy the Philosopher, he believes that what goes around comes around. As a result, he does not agree with aggression in business.

"If you meet steel with steel, it doesn't getyou anywhere," he said. "An aggressive attitude gets results but leaves bad thoughts." His philosophy is simpler: don't insist, persist.

Kelly tries to live a balanced life, where work and play can be intertwined. For years, he worked on tendering from 7am to 10am every morning. These days, he starts making calls at 8am, but is in the office earlier. He leaves between 5.30pmand 6pmand does not work at night.

"People do not achieve an enormous amount by working too much," he said. "They just end up tired."

Kelly's motivation now is setting up structures where people can achieve individual goals within the context of bigger goals. His approach involves "enlightened self-interest".

"It starts with a vision and for it to succeed, information has to be passed on in a timely, accurate manner," he said. "You have to know the score straight away."

Kelly has strong views on Dublin's development. "The city was awful. Little by little, it's becoming worthy of the people. It's a city of transition. We are suffering from the pains of success."

And although he praises Taoiseach Bertie Ahern and Minister for Finance Charlie McCreevy for keeping taxes low and attracting high-tech companies, he believes they need to bite the bullet on other issues.

"Why do we not have a stadium downtown? Why do we not have a conference centre?" He also believes the government needs to opt for more fixed price contracts, saying there shouldn't be open-ended arrangements.

When asked what his biggest mistake was, he immediately replied that becoming a Name in Lloyd's involved two of his biggest mistakes. "I regret it myself, but bringing my wife in was the biggest mistake, because we were both caught."

The unlimited liability nature of Lloyd's Names meant he was left facing heavy losses around 1990 when the bank called in the Names to underwrite massive losses. "I wouldn't go back," he said. "I think at that time we were keen on being accepted by the English."

He had to sell Clancoole, his house on Shrewsbury Road which he had bought for »460,000. He laughs at the memory of the day he purchased it at auction. Kelly was sitting on the floor at the back of the room and his wife, Maureen, tried to keep his hand down to stop him bidding.

But just before the hammer came down, Kelly said he would offer another »10,000 if it was any help. It was for the vendor and he got the house.

"It was an awful lot of money at the time," he said. The price was a record amount for the street, a record that stood for a number of years.

He sold it for »700,000 to Tony Mullins of Barlo, who in turn sold it to David Doyle last year for €9 million. But Kelly kept the side garden for himself and built a house on it.

"If Clancoole is worth €9 million, Paddy's house is worth €10 million at least," said a source.

Last year, Kelly hit the headlines when he donated €999,999.99 towards the provision of housing in the South African townships, a project run by his sometime business partner, Niall J Mellon. Mellon himself had already put up €1 million.

Dancing appears to put Kelly in a giving mood. At a fundraiser at Guilbaud's restaurant for the National College of Ireland (NCI) a few years ago, he asked its president, Joyce O'Connor, to dance. When she pointed out there was no music, Kelly said there didn't have to be. She twirled with him and he donated €250,000 to the cause.

Kelly, along with business partners Alanis and Pierse Contracting, eventually built the NCI.

In Dublin, he and his partners are putting the finishing touches to the Colonnade,the former National Children's Hospital on Harcourt Street. BCM Hanby Wallace is the tenant.

Work on Smithfield Market, a €400 million mixed use development being carried out by Kelly and the Flynn, Linders and Brady families, is continuing. On the southside quays, Kelly and his partners recorded sales of €90 million earlier this year at the launch of 298- unit Gallery Quay scheme. Work is ongoing there, while he and a number of partners now plan to develop the nearby CarrollsTransport site.

His next major scheme is a redevelopment of a site owned by Redquartz and the Flynns on Burlington Road. Still in the planning process, they are looking to build a hotel, a six-storey office block, apartments, a leisure centre and shops.

He also owns the Mango franchise for Ireland and is planning a number of Spar and Mace outlets.

In Florida, he is working on a scheme in Sarasota with Rene Gerau, a Canadian friend for the last 25 years, who asked him to put $10,000 into the development four years ago. Kelly is now investing $15 million.

He has a strong line of credit from the banks and is particularly close to Anglo Irish Bank,which is backing his contribution to the Florida scheme. The land cost $15 million and the project will be a 185,800 square metre town centre with buildings of between 18 and 25 storeys. The partners had planned a 45-storey building, but dropped the idea after the September 11 attacks in the US.

Kelly is now moving into the medical area and plans a nursing home on Dublin's quays. "People say it will never work, but why not? The residents will be in the city and people could walk to them after work.They can also walk to the shops themselves."

He is also a 20 per cent stakeholder in the new town centre planned for Bray, Co Wicklow, which is to be built on a 62-acre site bought in September for €90 million.The other stakeholders are the Flynns, Alanis, Durkan and Newlan McSharry.

In London City, he is partner in a venture building, a 9,290 square metre office block at Arthur Street, and even though rentsand capital valuesare being under pressure there, he is willing to take a long-term view. He's also proud of the fact that the developers, designers and financiers of the project are Irish. "One thing we are good at is construction," he said.

The Prem Group owns five buildings on Baggot Street, and Kelly eventually hopes to develop their gardens in order to create an office block and an open space for pedestrians to use that would link Pembroke Street to Baggot Court. That is down the line, something which Kelly is willing to wait for.

"He's not in a hurry to get money out of things," an agent said. "He's willing to wait,whereas many others want a return faster." It's a tactic that so far has served him well. As Kelly himself put it: "In property, five years is nothing."