Eddie Hobbs property firm plunges into red after €2m loss
The property investment firm established by celebrity consumer advocate Eddie Hobbs plunged into the red in 2013 to record losses of €2.1m.
The Cork-based Brendan Investment Pan European Property (BIPEP) plc had recorded a profit of €481,815 in 2012.
The loss in 2013 - just revealed in new accounts filed - represents a negative swing of €2.6m. The reversal in fortune for the property firm will disappoint the hundreds of people across the country who each invested €5,000 and more in the firm after its much-publicised launch in 2007.
Some 10,000 people downloaded the company's prospectus and brochure for the venture. The company's annual return showed the firm's appeal to urban and rural dwellers, with shareholders based all over the country.
However, the subsequent crash in the property sector resulted in the company raising only €12.6m from investors through the public round of funding.
Eddie Hobbs - who resigned as a non-executive director of the firm in March as a result of his appointment as president of Lucinda Creighton's new political party, Renua - remains an active shareholder.
The author and financial advisor is listed as having 9,533 shares in the firm, or 4.5pc of the business.
The firm's profit in 2012 arose mainly from a €1.2m gain from it purchasing distressed residential properties in the Detroit region of the US.
It made an initial investment of €4.56m in its Detroit venture, with the group aiming to realise inbuilt value within the properties acquired through a careful programme of property refurbishment and disposal.
However the 2013 accounts show that the loss was sustained after a write-off of €1m was recorded and a foreign exchange loss of €263,849.
The directors of the company state that they are satisfied with the investment strategy engaged in 2013 and with the financial performance for the year and balance sheet positions at year end.
The firm swung into the red in spite of the business more than tripling its net income from €1.3m to €4.7m in 2013.
At the end of 2013, the firm's assets had a net book value of €14.72m and had bank loans of €7.3m. Its cash pile dropped from €289,910 to €80,772.
Vincent Regan, CEO of Brendan Investments, confirmed the firm made the decision in 2012 to begin an exit from Europe and start to commit its resources to the US housing market and invest in the Detroit area, due to restrictive credit conditions for roll-over of the firm's German bank debt.
"In 2014, the diversified Detroit economy, which is becoming the metropolitan turnaround story of modern America, recorded the fastest economic growth in the US and second only to Dallas, which was built on recovering oil prices," he said. "The 2013 account losses are attributed to three main areas; Germany, USA and currency.
"The sale of the remaining German office building, forced upon BIPEP plc due to lack of workable banking in Germany, incurred a write-down from its book value accounting for a significant part of the loss reported in the 2013 accounts, with part of remainder of losses associated with impairments on the US side."