O’Flynn Group needs more than €400m for housing target
It will take several years, and several rounds of funding, if O'Flynn Construction Group is to hit its target of building 10,000 new homes after the firm relaunced its business.
The company has joined up with US investment house Avenue Capital and AIB to take control of its Irish business back from Blackstone. Avenue and O'Flynn have signed a five-year agreement.
Under the new structure, the O'Flynn Group will have about €400m to fund new development. The company is aiming to build 10,000 homes around Dublin and Cork, but to finance that the company will have to recycle its lending facilities several times. That means the firm will have to repay its borrowings and borrow again.
At current construction costs, 10,000 new homes would cost close to €3bn.
Speaking to the Irish Independent, O'Flynn Construction Group boss Michael O'Flynn said the new funding was a "starting point" for the business.
"That is a revolving facility, and it is an evolving situation. This give us an immediate platform," Mr O'Flynn said.
The company has lands with planning permission for 500 units and is in the process of finishing out some 200 homes.
In addition it has 350 acres of zoned land that could hold 3,500 homes and 186 acres of un-zoned land. It also owns close to 600,000 sq ft of office space or planning permission for offices.
The group has also regained control of its UK development assets, in a deal worth €500m. The UK business operates under the Tiger Developments and Victoria Hall Management companies.
The relaunching of the O'Flynn Group brings to an end a saga that has raged for the past 15 months. US private equity giant Blackstone bought the O'Flynn Group's loans from Nama for €1.1bn in April 2014.
By July however Blackstone moved to take control of the business. Those efforts were overturned in the High Court and since then Mr O'Flynn has been working to take back control of his business.
With this agreement, Blackstone will retain control of the investment assets such as the Elysian Tower in Cork, while O'Flynn takes over the development assets of the business.
In effect, the old company has been split in two.
As well as Avenue Capital, AIB is providing senior debt to O'Flynn Construction Group.