FIRST PUBLISHED IN THE IRISH MAIL ON SUNDAY ON 29/05/2011
By: Michael O’Farrell
IT’S been a tough couple of years for developers everywhere. But Westlife star Shane Filan has insisted that his property empire will survive the crash – despite narrowly avoiding the embarrassment of having his family’s development firm struck off.
The star acted to reassure fans after the Irish Mail on Sunday alerted him to the fact that his property company faced being shut down for failing to file its 2009 accounts. By failing to file, Shafin Developments Ltd – jointly owned by Shane and older brother Finbarr – risked being closed and having its assets seized by the State.
A number of warning letters were sent to the firm by the Companies Registration Office over recent months – and a final ‘strike-out’ notice was sent to the Filans on April 29.
That notice gave them just eight weeks to get their accounts in order.
However, this weekend the star’s lawyers revealed that the accounts had just been filed – and said that the firm was in good financial health despite the property crash.
In a statement issued late on Friday afternoon, the Filans’ solicitor wrote to the MoS saying that the accounts had now been filed – and that the threat had therefore lifted.
‘Shafin Developments Limited, together with their auditors Gilroy Gannon, can confirm that Shafin Developments Limited have filed all outstanding annual returns together with the relevant financial statements for 2009 and 2010 with the Companies Registration Office,’ they said in a statement.
‘This brings their financial accounts and filing requirements up to date with the Companies Registration Office. As a result, the conditions of the involuntary strike-off notice… have now been satisfied.’
The star’s lawyers were also happy to answer a string of detailed questions about Shane’s investments, and added that while the property crash was challenging for everyone, the family firm was in a strong position.
‘Shafin Developments Ltd have reduced the company’s overall bank debt by over 14% and it is envisaged that a similar level of debt reduction will transpire in the 2011 financial year,’ they said.
‘The Filans are at the latter stages of the planning process, as all but one of their projects have now been granted planning permission. They are expecting a decision from on Bord Pleanála in July or August on that project.
‘They are at the pre-construction phase of their Carraroe Neighbourhood Centre project (near Sligo town) and plan to commence construction this summer. When opened, this project will generate between 90 and 110 full-time jobs. Their project pipeline is not residentially based.
‘They have strong commercially viable plans for all of their projects and are prepared for the eventual upturn in the economy. They are looking forward to the rest of 2011 and 2012 in a positive manner.’
The assertive statement will come as a reassurance to all those who hope that the Filan family’s plans will provide a much-needed boost to the local economy. And it will reassure fans who might have feared that Shane had overextended himself during the boom.
An examination of Shafin’s previous accounts, as well other official documentation, reveals the vast scale of the property empire which the singer and his family have built up over the past seven years.
Either through his companies or personally, the singer has been involved in the purchase of swathes of land and buildings across the west of Ireland. The majority of these are mortgaged to the banks.
Shane and his family members have also given personal guarantees totalling a sum of almost €5m relating to a number of the loans he and his family have taken out over the years.
The personal investments with outstanding mortgages include student apartments in Sligo, several rental properties in housing estates and an apartment overlooking the River Moy in Foxford, Co. Mayo.
Further property purchases in the joint names of Shane, Finbarr and Peter Filan include a 60-hectare farm close to Dromahair, Co. Leitrim, purchased for €1.3m in 2009. (Both Shane Filan’s brother and father are named ‘Peter’. It is not known which man was involved in the farm purchase.) The farm, one of many properties partly or wholly owned by Shane, was funded by a Bank of Ireland mortgage which is still outstanding.
Apart from the Leitrim property, Shafin Developments Ltd, which is based in a Sligo office just across the street from the cafe which Shane’s parents ran, has four outstanding mortgages.
The firm was established in 2004, just as the property frenzy was reaching its crescendo and Shafin bought up a development site adjacent to Dromahair.
Just months after being formed it also received two Ulster Bank mortgages to fund the development of a 90-unit housing estate to be known as Stonebridge. These loans were registered against all of the company’s properties and assets.
Stonebridge even featured on an RTÉ interior design programme, Showhouse, in May 2006. To date, just over 50 houses have been completed and as of this week only 11 are for sale. In Stonebridge, as almost everywhere across Ireland, prices have been slashed. Units which once fetched €300,000 are now available for less than half that sum. And just like many estates across the country, some part-completed foundations are visible.
Shafin also has two further Ulster Bank mortgages registered against development land in Carraroe, Co. Sligo. The project received planning permission in 2009 for ‘a neighbourhood centre, office units, private clinic, gymnasium, creche facility and 68 non-residential units’.
The company said this week that work on the initiative would commence this summer. Other mooted projects include a proposed 80-bed nursing home at Sligo’s Lisroyan House, which received planning permission in 2009, and a supermarket on the site of a disused hotel in Dromahair. Shane and Finbarr Filan bought the hotel site, on the village’s main street, for a figure understood to be €800,000.
An Anglo Irish Bank mortgage was registered against the property in 2007.
The firm also had plans to build a mixed-used development in Ballinode, near the Sligo Institute of Technology.
Just a few miles away in Ballina, a shopfront remains boarded-up: it was earmarked for a high-end clothes shop after the site was purchased with a Bank of Ireland mortgage in 2007.
According to the 2008 company accounts – the most recent year for which documents are publicly available – Shafin Developments made a loss of €100,000 in that year.
At the time, the company had bank borrowings of €5.3m – which were secured against a number of properties and personal guarantees from the directors. It is these borrowings which the firm say they have since reduced.
The 2008 accounts state that the stock owned by Shafin was worth €7.2m – meaning in theory that the company was almost €2m in the black. However that stock is valued at cost price, something that the accounts acknowledge may not be accurate in a declining market.
‘In light of the current economic conditions we are unsure as to the ultimate net realisable value of the work in progress therefore we have valued same at cost. In the event that the actual net realisable values are less than costs then stocks and work in progress may be overstated,’ the accounts read.
Security held by the banks includes a personal guarantee to Shafin Developments itself in the sum of €1.115m from an unspecified person and unspecified personal guarantees to Ulster Bank from the directors for the sums of €2.6m, €800,000 and €1.875m.
It is not known which directors are liable for which amounts, and this weekend the Filan family’s lawyer declined to answer questions about just who would be liable for what.
The scale of the property portfolio with which Shane is involved has naturally led to questions as to the impact that the property crash has had on his personal wealth.
Other artists, such as Jim Corr, are already facing heavy losses on property deals. Ironically, many savvy celebrities began investing in property because of the fickle nature of showbusiness.
According to the correspondence from their lawyer, the Filans’ business is healthy and ‘trading ahead of expectations given the realities of the property sector generally’.
They did not offer a reason for the failure to file accounts for more than a year, saying only that ‘it was their right to file 2009 and 2010 accounts jointly in 2011’.
