Deutsche Bank AG, Europe’s biggest investment bank, bought a portfolio of Irish rental homes from Danske Bank A/S as the Danish lender pulls back from the country, two people familiar with the matter said.
Danske Bank, based in Copenhagen, agreed this week to sell 680 homes to Frankfurt-based Deutsche Bank, said the people, who declined to be identified because the details aren’t yet public. Danske seized the properties after the owners, who bought them as investments, fell behind with mortgage payments.
Donnchadh O’Leary, a Danske spokesman who works for Edelman in Dublin, confirmed the portfolio had been sold, without naming the buyer or the price. A Deutsche spokesman in London wouldn’t comment on the purchase.
Some of the world’s biggest financial firms are wagering on a rebound in the Irish property market as the country recovers from the biggest real estate crash in Western Europe. The German lender said this month that it’s raising 8 billion euros ($10.9 billion) in capital, partly to help its fixed-income business grab market share.
“Some of this new capital will undoubtedly be put to work in areas such as this in a bid to boost returns,” said Mediobanca SpA analyst Christopher Wheeler, who has a neutral rating on Deutsche Bank’s shares. “They’ve got a new confidence and a new direction.”
Acquistions such as the Danske Bank portfolio may require the lender to set aside more capital compared with other assets to protect against possible losses, according to Wheeler.
Deutsche Bank bought the properties through its structured credit business, according to one of the people. The division focuses on “illiquid credit, securitisations, hard-asset financing and special solutions,” according to its website.
Buy-to-let homes are among the most distressed Irish property assets. About 27 percent of 145,530 buy-to-let mortgages outstanding at the end of 2013 were in arrears, according to the Ireland’s central bank.
While Deutsche Bank joins Lone Star Funds and Paulson & Co. in buying Irish real estate assets, Danske Bank is exiting businesses there to stanch losses in the country.
“The decision to sell the properties as a portfolio reflects our decision to strategically manage down the non-core portfolio in Ireland,” Peter Hughes, head of Danske Bank’s non-core Irish assets, said. “We’re pleased with the outcome which reflects increasing investor confidence in the property market in recent months.”
About 60 percent of the properties are in Dublin and the rest are across Ireland. Many of the properties are vacant and there are no so-called principal private residences in the portfolio, Danske Bank said in a statement.
Some signs are emerging of a recovery in Ireland. Dublin homes gained 3.1 percent in April, the biggest gain in six months, and 18 percent compared with the same period in 2013, Ireland’s central statistics office said this week.