Irish Bank Offers Properties for 70% Less Than 2007 Value

Royal Bank of Scotland Plc’s Irish unit offered to sell properties, including 640 apartments and a hotel, for about 70 percent less than their value at the market’s 2007 peak, according to the broker managing the sale.

The Gemini portfolio, containing buildings in the Irish cities of Dublin and Cork, has an asking price of 75 million euros ($97 million), according to Domhnaill O’Sullivan, a director at Savills Plc’s Dublin office. The London-based broker is selling the real estate, which also includes stores, on behalf of receivers KPMG and Grant Thornton Ltd.

The property crash and a lack of mortgage financing caused the number of Irish households in rented accommodation to increase by almost 50 percent in the five years through April 2011, the country’s Central Statistics Office said in a report in August. That’s attracting private-equity firms that are looking to buy as many as 3,000 apartments at a time, Brendan McDonagh, chief executive officer of Ireland’s bad bank, the National Asset Management Agency, said in April.

“We forecast the multifamily market will continue to be very active and evolve to compete with commercial investments,” O’Sullivan said in the statement. “We envisage that over 2,000 units could come onto the market in the next 12 to 18 months.”

Glashaus Hotel

Ulster Bank’s Gemini generates more than 5.5 million euros in annual rent, according to Savills. When fully leased, tenants may pay about 8.2 million euros a year in rent for the properties, the broker said.

The portfolio includes 345 apartments at Tallaght Cross East, about 13 kilometers (8 miles) west of downtown Dublin. The sale also includes the empty 48-room Glashaus Hotel and 20 shops at the development. A third of the space in the retail units is leased.

Keenbury Properties developed the site, according to documents filed with South Dublin County Council. Ulster Bank put the company into receivership in December 2009, according to Iris Oifigiuil, the Irish State Gazette.

More than 150 apartments at Island Key, less than a kilometer from Dublin’s International Financial Services Centre, are included in the portfolio. The new owner will have to refurbish 53 of the apartments before they can be offered to tenants.

Market’s Slump

Ulster Bank is saddled with loans secured by real estate valued at a fraction of what it was when the lender advanced money to borrowers. Commercial property values have fallen by about 66 percent since the third quarter of 2007, when the financial crisis burst Ireland’s investment bubble, Investment Property Databank said in July.

The Dublin-based lender appointed a receiver to Ellen Construction Ltd., the site’s developer, in November 2009. Mortgage documents filed with the Companies Registration Office show the bank’s loans were made for the Island Key development.

In Cork, in the country’s south, 140 apartments at Orchard Gardens are being sold. A third of the 1,372 square meters (14,770 square feet) of retail space is leased to Tesco Plc’s Irish unit, according to Savills.

Planning permission for the project was sought by Frinailla Developments Ltd., according to a regulatory filing. Ulster Bank had a mortgage over the land, accounts filed by the developer show. Frinailla has since been dissolved, according to the CRO.

Kennedy-Wilson Holdings Inc., a U.S. investment company, bought a 210-apartment block close to Google Inc.’s European headquarters in Dublin with Canadian insurer Fairfax Financial Holdings Ltd. in June. Kennedy-Wilson aims to own more than 1,000 homes in Ireland, according to Peter Collins, the managing director of the company’s European unit.

Impairment charges at Ulster Bank’s so-called non-core unit fell to 191 million pounds ($310 million) in the second quarter from 982 million pounds a year earlier after the company made a “substantial” provision for declining real estate prices in 2011, Edinburgh-based RBS said in an August statement.

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