Wednesday 15 August 2018

Chips off the old blocks

Long-established builders are joined by a number of newcomers in a scramble to stack up property profits, writes Ronald Quinlan

Michael Stanley of Cairn Homes
Michael Stanley of Cairn Homes
Ronald Quinlan

Ronald Quinlan

As 2018 gets under way, the economy is humming and the country is making its way back to full employment. With no let-up in the flow of foreign direct investment and with a chronic shortage in housing supply to be addressed, there will be no shortage of potential entrants to Ireland's property market as it once again becomes the only show in town.

So 10 years after the crash, who makes up our property elite? Well, this time round, it's different. With the traditional debt-funded developer model currently out of favour, those who ruled the roost during the Celtic Tiger era have found themselves forced to compete with a range of new structures including publicly listed builders, Real Estate Investment Trusts (Reits) and global property funds.

The 'Old School'

Michael O'Flynn is developing numerous residential developments both in Dublin and in his native Cork. Included in the schemes currently being delivered by O'Flynn Construction in the capital are Rokeby Park in Lucan and Broadlands in Killiney. Elsewhere in south Dublin, the developer also has plans for the delivery of hundreds of new homes at Beech Park in Cabinteely. The O'Flynn Group is in the process of completing the delivery of 200 new homes in Cork.

Michael O'Flynn. Photo: Michael Mac Sweeney/Provision
Michael O'Flynn. Photo: Michael Mac Sweeney/Provision

Since breaking free from Nama in 2015, Johnny Ronan hasn't wasted any time in putting his stamp back on Dublin's property map through his new entity, Ronan Group Real Estate (RGRE). All told, the company is involved in the delivery of over €1bn in new projects, including a €300m mixed-use development extending to one million square feet of offices, and comprising a hotel and retail units at Spencer Place on Spencer Dock, and a €300m office campus at AIB's headquarters in Ballsbridge.

Having successfully resisted the transfer of his companies' loans into Nama, and then come through a titanic battle with the billionaire Barclay brothers for control of the world-famous Claridge's, Berkeley and Connaught hotels in London, it's no surprise to find that Paddy McKillen still has a place among Ireland's property elite. While McKillen, whose Irish assets include the Jervis Shopping Centre, continues to manage the redevelopment of the London hotels, which are now owned by the Qatari-headquartered Constellation Hotel Group, he has also been active in Dublin. He emerged recently as the successful bidder on a prime 10-acre development site in Blackrock in south county Dublin where he hopes to develop 300 luxury homes.

Ballymore founder and chief Sean Mulryan is very much active in the Irish market again, having overseen his group's repayment of its €3.2bn gross debt to Nama at the end of 2016. Ballymore is currently partnering Singaporean fund Oxley Holdings on the development of the one million square foot Dublin Landings scheme in the city's Docklands.

The 'New Breed'

Johnny Ronan. Photo: Tony Gavin
Johnny Ronan. Photo: Tony Gavin

Looking at the new breed of developers, the co-founders of Cairn Homes, Michael Stanley and Scottish accountant Alan McIntosh, are sitting prettiest, thanks to their decision to float on the London Stock Exchange in 2015.

Having seen its market capitalisation come in at €429m following the IPO, the company subsequently moved to snap up enough land in Dublin, Kildare, Meath and Wicklow to deliver over 14,000 residential units with the part-acquisition of Ulster Bank's 'Project Clear' portfolio. More recently its purchase of the 8.5-acre 'Project Montrose' site at RTE's Donnybrook headquarters has made it a compelling proposition for investors in a market starved of new homes.

Michael Stanley, his brother Kevin, and Alan McIntosh have already made millions of euro for themselves following their decision to sell 2.1pc of their shares last September, for a total of €26.6m. The trio continue to hold shares in Cairn worth a combined €100m.

But while the residential sector is inarguably the hot topic in property for the general public, some of the smartest moves in real estate were already made on the commercial front before Ireland had even exited the EU/IMF bailout in 2013.

Kevin Nowlan. Photo: El Keegan Photography
Kevin Nowlan. Photo: El Keegan Photography

Former Gunne Commercial managing director Pat Gunne and Green Property chairman Stephen Vernon secured first-mover advantage when they floated Ireland's first Reit (Real Estate Investment Trust), Green Reit, on the Irish and London stock exchanges in July 2013.

Armed with investors' cash, the company swooped on prime office properties in Dublin's Central Business District (CBD) just as the market was beginning to emerge from the doldrums. Today, Green Reit's portfolio, which carries a value of over €1.38bn, according to its latest annual report, includes prime assets such as One Molesworth Street.

Just over five months after the flotation of Green Reit, Kevin Nowlan (right), a former senior portfolio manager at Nama took Hibernia Reit public, raising €365m in an IPO on the Irish Stock Exchange. Since then, the company has focused its investment strategy on commercial real estate in Dublin's booming Docklands and elsewhere within its Central Business District.

The ranks of Ireland's property elite have been joined by a number of newly minted and more established developers.

In terms of the first category, former Kerry-based estate agent Pat Crean is probably the most notable. Having joined forces with Wicklow-born young gun Greg Kavanagh in New Generation Homes at the height of the financial crisis, the pair assembled a vast residential land bank in Dublin and its surrounding commuter counties and waited for the market to turn in their favour.

While Kavanagh exited the business following the agreement of a deal with Crean and New Generation's financial backers, London-based M&G Investments in 2016, the renamed Marlet Property Group, which Crean still heads up, is in the final stage of negotiating a €450m forward-funding deal with London-based Round Hill Capital for the 'Dublin Living' scheme, a portfolio of 1,170 apartments across four key sites in the city.

Galway-born developer brothers Luke and Brian Comer have been around the property industry a little longer, having left for London to ply their trade as plasterers in 1984. With much of their activity and investment focusing on the UK and Germany, they managed to avoid the worst excesses of the Celtic Tiger, returning instead to take advantage of the opportunities that arose in the wake of the crash.

The Comers have taken full advantage of the Irish economic recovery with the development on the site of Number One Ballsbridge, a high-end offering of offices and apartments. The Comer Group recently secured Avolon, one of the world's leading aircraft lessors, as tenants for one of the scheme's three blocks.

Sunday Independent

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