Friday 30 September 2016

Fears of large-scale evictions when investors leave Ireland

Families living in properties controlled by investment funds face an uncertain future

Shane Phelan and Peter Flanagan

Published 25/04/2016 | 02:30

Photo Brendon O'Hagan/Bloomberg
Photo Brendon O'Hagan/Bloomberg
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Families renting properties owned or controlled by large investment funds are facing huge uncertainty over the future.

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Several of the largest investment firms, who have swooped in to buy swathes of Irish property loans in recent years, are refusing to give assurances about how long they will continue to operate here.

Their silence will fuel fears of the potential for large-scale evictions, such as those threatened in Tyrrelstown in Dublin and Blackrock in Cork, where properties are being sold out from under their tenants.

Many funds operate cycles of five years or even less, before they move to cash in on their investment.

The Irish Independent surveyed the major investment funds who have bought into the property market in recent years.

However, most refused to say how long they would be staying in the Irish market or if they intended selling up to make a quick return on their investment.

They include firms such as:

• Goldman Sachs and private equity group CarVal, which together bought a €2bn portfolio of Irish buy-to-let residential and small commercial mortgages in 2014;

• Lone Star, whose purchases in Ireland have included loan portfolios with a face value of €7bn sold by the Irish Bank Resolution Corporation in 2014;

• Apollo Global Management and Deutsche Bank, who purchased a €500m real estate loan book from Ulster Bank last year;

• Cerberus, which has been buying property loan portfolios from the State and banks over the past four years.

A number of investment firms with a track record of longer-term investment, such as IRES Reit and Kennedy Wilson, declined to be drawn on their intentions.

A small number who would comment said they intended remaining here for the foreseeable future.

Mars Capital, which has purchased more than 1,000 apartments and houses in Ireland, said it had made “a long-term commitment” to its business here.

The firm said it had recruited a team of more than 40 staff in Dublin to service loans over the coming years.

“We will continue to monitor the performance of the portfolios and will review our strategy on an ongoing basis,” a spokesman said.

He said it was not Mars’s policy to put unnecessary pressure on borrowers or hasten repossessions – and that it adhered to the Central Bank’s code of conduct on mortgage arrears and the consumer protection code.

Pepper Group, which entered the Irish market in 2012 when it bought the mortgage business of GE Capital, also said it had a “long term commitment to Ireland”.

A spokeswoman said it had expanded its business here, now employing 400.

She said it had recently launched a mortgage lending division and was also providing advisory and asset management services.

US investment firm Blackstone, which controls about 200 units, most of which are in the tallest apartment block in the country, the Elysian Tower in Cork, declined to comment.

Dublin-based Hibernia Reit, which is understood to own 313 apartments in the capital, was precluded from commenting as it is in a “closed period” ahead of publishing its annual results. The Wyckham Point development in Dundrum makes up the bulk of its holdings in the capital.

The European arm of the LA-based firm Kennedy Wilson also declined to comment. It has bought up swathes of apartment blocks around Dublin.

The firm is building apartments at Clancy Quay near Heuston Station and plans to have 800 apartments there by 2018. It also controls another 353 units at two sites in Dublin.

It has bought both loans and property outright in the past and has previously indicated it is open to buying more loans here with a view to taking over the related property eventually.

US investment firm Hines has spent close to €1.2bn in Ireland in recent years.

It plans to build 3,800 homes at Cherrywood in west Dublin and has made clear it expects to do more deals here in the future.

Canada’s IRES Reit has become the biggest private landlord in the country in the space of barely three years.

However, it did not answer questions from the Irish Independent on its future intentions.

It controls 2,056 apartments around Ireland, mostly in Dublin. It bought many of these in huge portfolio sales from Nama.

Like Kennedy Wilson, IRES Reit has done very well out of Ireland and is thought to be keen for more.

In February, company chief executive David Erhlich said there was now a “growing Irish economy and a severe supply and demand imbalance which is likely to extend for a number of years”.

“[As a result], our prospects for continued bottom line growth are very positive,” he added.

Most experts expect residential rents to continue to climb as there aren’t enough homes being built and demand remains high. Average rents rose 9pc in the last three months of 2015, according to Daft.ie.

Irish Independent

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