Irish Developer Smyth Revives as Nation Exits Bailout

As Ireland goes, so goes Noel Smyth, one of the country’s richest men until he got swept away by the property crash that cost the state its sovereignty.

Now, with Ireland on the verge of exiting its bailout, Smyth, 61, is advising investors as they seek to buy troubled assets from lenders including the former Anglo Irish Bank Corp. Smyth was once among the bank’s biggest clients.

“I’ll give you a quote which I live by, which was given to me by a priest friend of mine,” Smyth said in an interview in Dublin. “He says, and I love it, that faith is the ability to live life on the evidence of its better moments.”

Amid the biggest real estate crash in Western Europe, Smyth lost his money, four houses and a 400-piece art collection. As developers like him floundered, the state sought a bailout in 2010. Now, amid signs of a recovery, the nation is becoming a magnet for international buyers led by Blackstone Group LP, offering a chance for Smyth to get back in the game.

“You can beat yourself up and do nothing and become Hamlet-like,” said Smyth. “Or you can get on and do it and say fine, now I need to move forward again.”

Selfridges Group Ltd., owner of the biggest department store on London’s Oxford Street, backed Smyth’s Fitzwilliam Finance Partners Ltd. to buy 160 million euros ($220 million) of loans from Royal Bank of Scotland Group Plc, the Irish Times reported last week.

The loans were made to Irish retailer Arnotts, the newspaper said. Smyth declined to comment on the deal, and Annette Cremin, a spokeswoman for Selfridges, declined to comment.

Art Collection

After setting up his own law firm before he turned 30, Smyth invested in property around Ireland and the U.K. while building an art collection that included works by Jack B. Yeats, brother of the Nobel-Prize winning poet William Butler Yeats.

By 2007, the height of the Celtic Tiger era, he and his wife were worth about 155 million euros, according to the Sunday Times Rich List.

Meanwhile, Ireland had become one of the richest countries in Europe as real-estate prices surged. Home prices quadrupled in the decade through 2006, and construction amounted to about a quarter of the economy.

“I was dismissive of people who basically said: this thing can’t continue,” Smyth said. “I didn’t want to listen to it.” Laughing off his father’s warning that “only pigeons” would live in all the real-estate built around Ireland, Smyth pushed on borrowing “a couple of hundred million” euros from Anglo Irish to redevelop a shopping mall in Tallaght, a Dublin suburb.

Sold Bonds

His company also sold bonds to investors secured against a U.K. property portfolio. The gamble failed when the values of his properties slumped. The loan defaulted and bondholders sold off most of the properties.

In Ireland, too, property prices plunged, pushing the financial system close to collapse. By 2010, the mounting cost of saving the banks forced the state to seek a 67.5 billion rescue from the European Central Bank, European Union and International Monetary Fund.

Meanwhile, Smyth’s loans moved into the hands of state bad bank, the National Asset Management Agency, known as NAMA, created to purge lenders of risky commercial property loans.

The agency now controls his stake in the Dublin shopping mall. His net worth is zero, Smyth said.

Smyth declined to comment on how much he owes NAMA, and the agency declined to comment on their dealings with the developer.

Lowest Point

Smyth recalls his lowest point as being summoned home from India by his lawyers in November 2011, as banks chased his debts. He had been helping his daughter’s charity build a school close to Kolkata in India.

“I don’t cry easily but I cried that day,” said Smyth, adding he takes his share of the blame for the Irish crisis. “Forget about everybody else. It’s as a result of what I did on the basis of trying to move things forward.”

While helping to run a suicide prevention charity, his thoughts turned to reinvention, and Smyth sought to advise international buyers coming to Ireland seeking bargains as signs of life emerged in the economy.

Unemployment has dropped for six months in a row, and house prices in Dublin are rising again. Over the past 18 months, Blackstone, Apollo Global Management and Gordon Brothers Group LLC have bought real estate in Ireland, and Irish commercial real estate values rose for the first time in six years in the third quarter, according to the Investment Property Databank Ltd.

More than 1.5 billion euros will be spent on Irish investment property this year, compared with about 500 million euros in 2012, according to CBRE Group Inc. Smyth has advised Lone Star Funds and Lazard Ltd.

“We’re a beacon for people who want to come into Ireland,” Smyth said. “They know we don’t have any money to invest, but we do have expertise.”

Before it's here, it's on the Bloomberg Terminal.