Hibernia REIT invests in Dundrum apartments
Recently listed Hibernia REIT has made its first acquisition with a €67m deal to buy a portfolio of loans secured on a mix of mainly residential properties in Dublin.
The portfolio was bought in an off-market transaction from Ulster Bank, and is the first portfolio sale by the RBS-owned bank which until now relied on individual sales and receiverships to work through its overhand of boom-era property loans.
The properties behind the loans bought by Hibernia include 280 Dublin apartments in blocks at Wyckham Point in Dundrum, on Herbert Road in Ballsbridge and in Phibsboro, Clanbrassil Street, and Dun Laoghaire. It includes around 30,000 square feet of commercial property and development sites in south Co Dublin and Kildare.
They are being sold by Ulster Bank parent RBS's new Capital Resolution unit – the internal bad bank structure set up to work out non-core and non-performing assets following a major government-ordered review of the bank last year.
Hibernia said it plans to spend around €20m developing the assets, the bulk of which is likely to go on finishing 213 partially completed residential units close to the landmark Dundrum Town Centre.
The deal is the first for Kevin Nowlan's Hibernia REIT, which raised €385m to invest in Irish property when it floated on the stock market in December,
Meanwhile, insurance giant Aviva has confirmed the €250m sale of its majority stake in the Liffey Valley shopping centre in Dublin.
The stake is being acquired by a consortium of HSBC Alternative Investments and Hines, an international real estate firm.
Talks between the two sides were first reported last October. The sale of the 72.8pc stake values the entire shopping centre at €344m, which is close to the €350m which was sought in a 2011 attempt to sell the property that ended without a deal.
Liffey Valley is home to dozens of retailers, ranging from Dunnes Stores to Eason, Carraig Donn to B&Q.
At half-a-million square feet, it is the fourth-biggest retail centre in Dublin and among the biggest in the country.
The other shareholder in Liffey Valley is Grosvenor Group, owned by the Duke of Westminster, who was once Britain's richest man. It is holding on to its stake in the business.
Only the beginning of great sell-off by Ulster Bank
HIBERNIA REIT is out of the traps to become the second Irish real estate investment trust to buy property loans here, but the big news is that Ulster Bank is the seller, writes Peter Flanagan.
Ulster Bank has upwards of €3bn worth of property loans here which it has committed to remove from its books as part of a restructuring mandated by its parent, Royal Bank of Scotland.
The bank is widely expected to sell about a third of that this year but had not done any deals up to this point.
Now that the first sale is out of the way though, we can expect a lot more to come. Ulster Bank was one of the biggest lenders in Ireland during the boom, as the company pushed harder for big profits. This worked for a while but we all know what the end result was.
Famously, it financed Sean Dunne's purchase of the Berkeley Court and Jurys Hotels in Ballsbridge in 2005 – a deal which made that land more valuable than property in the heart of Manhattan.
Dunne's plans for a €1bn skyscraper on the land never came to fruition, and he has since filed for bankruptcy in the US.
With UK Chancellor of the Exchequer George Osborne pushing for a quick solution to Ulster Bank's problems, the bank is now pursuing a much tighter timeframe for selling its loans and properties than had been previously expected.
Ulster is one of the biggest property owners in the country and, at a time when activity in the commercial property sector is at a five-year high, the time is ripe for much of this portfolio to be formally put on the market.
The bank is understood to be splitting its properties and property loans into tranches, rather than selling things off individually.
Having said that, there are still going to be deals similar to this one – relatively small in value but covering a lot of different properties.
The great UIster Bank sell-off is only beginning.