Fears of large-sale evictions when investors leave Ireland
25/04/2016
Shane Phelan and Peter Flanagan
Families renting properties owned or controlled by large investment funds are facing huge uncertainty over the future. Several of the largest investment firms, who have swooped in to buy swathes of Irish property loans in recent years, are refusing to give assurance about how long they will continue to operate here.
Their silence will fuel fears for large-scale evictions, such as those threatened in Tyrrelstown in Dublin and Blackrock in Cork, where properties are being sold out from under 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 would be selling up to make a quick return on their investment.
The include firms such as:
Goldman Sachs and private equity group Carvel which together bought a 2 billion pounds portfolio of Irish buy-to-let residential and small commercial mortgages in 2014:
Loan Star whose purchases in Ireland have included loan portfolios with a face value of 7 billion pounds sold by the Irish Bank Resolution Corporation in 2014
Apollo Global Management and Deutsche Bank who purchased a 500 million pounds real estate loan bank from Ulster Bank last year
Cerberus, which has been buying portfolios from the state and banks over the past for years
A number of investment firms with a track record of longer-term investments, such as IRES and Kennedy Wilson, declined to be drawn on their intentions. A small number who would not comments said they intended remaining here for the foreseeable future.
Mars Capital, which had purchased 1,000 apartments and houses in Ireland said it had made “a long-term commitment to its business here”. The firms said it had recruited a team of 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 on-going basis a spokesman said.” He said it was not Mar’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 Ireland in 2012 when it bought the mortgage business of GE Capital, said “it had a long term commitment to Ireland”. A spokesman said it had expanded it’s 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 block in the country, the Elysian Tower in Cork, declined to comment.
Dublin based Hibernian 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 it’s 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 Kennedy Wilson has 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 1.2 billion pounds in Ireland in recent years. It plans to build 3,800 homes at Cherrywood in West Dublin and has made it clear it expects to do more deals here in the future.
Canada’s IRES REIT has become the biggest landlord in the country in the space of three years. However, it did not answer questions from Irish Independent on its future intentions. It controls 2,056 apartments around Ireland, mostly in Dublin. It bought many of these in 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 Erlich said there was 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 9 per cent in the last 2 months of 2015, according to Daft.ie