Peter Flanagan: How do huge global property players end up owning semi-Ds in Barna?
Published 25/04/2016 | 02:30
The Irish economy has improved hugely since the depths of the EU/IMF bailout in 2010, but as the Government discovered at the general election, most of the improvement has been concentrated in Dublin.
The recovery has begun to touch the likes of Cork, Galway and Limerick, but beyond urban areas there are few signs that the economy is much better than five or six years ago.
It’s understandable then that the investment funds which have spent millions of euro here have focused on the capital. But what are they doing buying up property in the rural areas?
In many cases, they have done so as a means to an end. The Property Price Register shows 43 deals that have included 10 or more houses and apartments outside Dublin. Where the big investors – the likes of Cerberus Capital Management, or a Goldman Sachs – have been the buyers, the deal has been done as part of a much wider portfolio.
Cerberus Capital – based in New York but with offices around the world – controls a number of houses in Barna in Co Galway. Cerberus almost certainly had little or no intention of buying those houses specifically.
Instead, Cerberus got its hands on them when it bought the Project Arrow portfolio of loans from Nama in October last year. Cerberus paid €800m for the portfolio, which was made up of loans valued at €6.2bn when they were originally advanced during the Celtic Tiger.
The final Project Arrow portfolio was comprised of 302 loans secured against 1,906 assets. That gives you some sense of just how big the portfolio is.
Nama was quite clever in how it packaged Arrow and other portfolios it sold. It included some desirable assets that would attract buyers, but also other assets.
That is how a company like Cerberus, which manages assets worth about $30bn, can end up controlling semi-detached homes in Galway.
It is not just the big players from overseas who have done deals around the regions. In many cases, the buyer has been a local businessman who knows the area well and recognises what they think is good value when they see it.
That was the case in Limerick City when a consortium led by Ronan Brannigan and Michael Roche were reported as the buyers of the “City Central” portfolio of the Savoy Hotel and 84 apartments in the heart of the city for €6.9m.
Mr Roche and Mr Brannigan already managed the hotel and clearly knew the strength and weaknesses of the portfolio and the surrounding area. They were probably in the best position of any buyer to take full advantage of the deal.
And then there is the local individual who is making a business decision but is also doing a good turn by taking over a ghost estate or apartment block.
That appears to be the case at the Ascail Rois estate in Carrickmacross, Co Monaghan. The estate of 31 homes was bought in November 2014 by Sean Rooney, who co-founded the waste disposal firm Oxigen.
Mr Rooney purchased the half-finished three and four-bedroom houses and six apartments at an Allsops auction for €1.9m.
He then finished out the homes and put them on the market for individual sale in April 2015.