Not all of the ‘Cuckoo’ funds currently snapping up Ireland’s apartment blocks in fell swoops for fat profits are vultures, predators, or pension and international funds seeking top rents.
In this Christmas month, a benign Irish ‘cuckoo’ fund has taken a largely vacated, high-quality, 63-unit Cork apartment development, Park Avenue, in suburban Douglas, under its wing, destined for social-housing use.
An as-yet unconfirmed housing association, or Approved Housing Body (AHB), is closing a deal worth €17m on all four blocks, totalling 62 apartments, plus some commercial space, with the last handful of tenants serving out a notice period.
The mid-2000s-developed investment went for sale in May, for €17.5m, via agents, CBRE, in their Dublin and Cork offices.
On launch, they said they anticipated both national and international investor interest and they noted that the scheme had a potential rental income of €1.2mpa.
At the time, 53 of the 62 apartments had been vacated, in advance of Park Avenue being put up for sale, and the remaining tenants have been serving out their notice, with the eventual buyers offered full vacancy at Park Avenue after that.
This week, the agents, CBRE, declined to comment on the sale, which is understood to be very advanced, or to identify the purchaser, or even the sector in which they operated.
When concluded, it will be the second significant private rental sector (PRS) purchase of an apartment development of scale in Cork city by the voluntary housing/AHB sector this year. It’s also one of the very last completed and available PRS developments in the greater Cork region to be sold-on (see below).
Its purchase will follow on the c €20m sale of Leeside Apartments, a scheme of 78 apartments on Bachelor’s Quay, in the city centre, which initially hadbeen bought by a private investment fund, Lugus Capital, in 2017.
After that purchase, Dublin-based Lugus Capital had intended to evict tenants and issued notice in controversial circumstances, to allow necessary upgrades to the apartments, which had been built by the Corbett family, before Clúid and Cork City Council stepped in.
At that time, and in relation to their €20m deal on Leeside Apartments, Clúid said, “we value everything that we buy, so we have to be able to stand over what we pay for it, and if the valuations come back well below what we’re paying for it, then we can’t proceed.”
While the intending purchaser of Park Avenue, on the South Douglas Road, is as yet-unidentified, reliable market sources indicate it is an AHB (and, not necessarily Clúid), and is not a private fund.
When offered back in May, indicative rents that Park Avenue units might have attracted from private landlords were quoted at c €1,300 a month for a one-bed, €1,700 a month for a two-bed, and €2,000 a month for a three-bed.
Typically, when Approved Housing Bodies (AHBs) rent to tenants, under a ‘payment and availability’ agreement, payments are made via the local authority on long leases (10 to 30 years) at levels ranging from 80% to 95% of market rents, with the higher, 95% level typically in the case of apartments, Junior Housing Minister, Damien English, TD, told the Dáil earlier this year.
At the time, he said the national average rent to AHBs was €878 per month, and by the end of last year, over 6,000 units had been acquired in this manner for social housing.
Meanwhile, the impending c €17m sale of Park Avenue’s 62 units looks set to push the eventual tally of PRS sales in Cork to well over €200m, with c €40m of that paid by the voluntary/AHB sector.
The top PRS sale in Cork is the Elysian, with 217 units sold for €87m (including its commercial element, acquired by US fund Kennedy Wilson).
Other private/investor/fund buys were the €67m paid by pan-European group, LRC Europe, who bought the 140-unit City Square in Blackpool for €32m, as well as sizeable sections of the Quadrants and Crescent apartment developments in Ballincollig, for €35m; LRC got 167 units out of a total of 270 developed there.
Also sold on to private investors/funds were multi-unit developments in Blackrock (Eden), Boreenmanna Road, Carr’s Hill, and at Harty’s Quay in Rochestown.
Market observers point out that Cork’s future PRS purchases will have to be in the new-build sector, as virtually all of the completed and available residential block stock has now been accounted for.
Several major ‘build to rent’ projects are through, or coming through, the planning process, at locations like Horgan’s Quay, Albert Quay/Sextant/Carey Tools site, Jacob’s Island (currently being marketed with a 25-storey tower proopsed as part of a 400-unit project) and at the South Link road, with 118 units approved just this week by An Bord Pleanala, in a 17-storey tower on a 0.8-acre site.