Tiresome debate about housing ‘vulture funds’ only for the birds

Caveat: Rhetoric around institutional capital in market adds little but spittle

Last month, US property company Hines contacted Maynooth University lecturer and prominent left-wing activist Rory Hearne. He says Hines complained to him that he had defamed it in tweets that referred to it as a "vulture fund".

In July, Hearne had tweeted an image of a Business Post article about State financial supports for renters and the effect that such payments have on the private market.

The article was based on a market report prepared by KPMG for Hines, submitted as part of the property company’s application for planning permission for 1,614 build-to-rent apartments on the grounds of Clonliffe College in Drumcondra on Dublin’s northside.

If building goes ahead, the units, the majority of which are studios or one-bed apartments, would not be sold to individuals but instead would go straight onto the private rental market and be managed as a single investment for Hines.


It is an exemplar of sort of institutional finance-driven property schemes that drive people crazy on the Irish political left. They see them as part of a “commodification” of housing that drive up rents for all.

KPMG said in its report for Hines that State payments to renters to help them pay for their housing had driven up rents in the market by depleting the remaining stock available for fully private tenants. It also said State financial interventions had “increased appetite for investment” among international developers.

This seemed to catch the eye of Hearne, who saw it as some sort of vindication of the left’s criticisms of the Government’s handling of the market – enticing private interests to chase public cash.

“US investor vulture fund Hines says it as it is – Irish Govt interventions in rental market ‘increased appetite for investment’ among funds,” tweeted Hearne in July, alongside the article image and a pair of crying emojis. He then referred to Hines’s latest investment, the proposed Clonliffe development.

It subsequently emerged this week that Hearne, along with about 120 others including the Sinn Féin leader Mary Lou McDonald, has formally objected to the €610 million Clonliffe scheme.

Tenement comparison

“Stop tenements of the 21st century,” Hearne later tweeted in relation to Clonliffe, after Hines had complained about his earlier tweet. I’m not sure I would choose to live in a small studio flat, given a larger alternative. But to suggest that modern build-to-rent units could be anything comparable to “tenements” is more than a little breathless.

I have learned a little bit about tenements recently. Almost an entire generation of my direct ancestors died of tuberculosis in Dublin tenements 120 years ago. It is hyperbolic to the point of farce to draw any link between those sort of times and now. Modern housing is a world away.

Whether institutional investment contributes to a stabilisation of the rental market, or its distortion, would seem to be far more fertile ground for activists than maintaining the fiction that US funds are interested in owning “tenements”.

Meanwhile, one would also have to question the wisdom of a global, hulking fund with almost $161 billion of assets under management making such a complaint to a political activist who compared it to a bird. It seems incredibly thin-skinned. Why bother? His activism seems to be in good faith. And has Hines never heard of the Streisand effect?

Whether or not Hearne’s tweets crossed a line of legal acceptability may well end up being for others more qualified than me to judge. One thing does seem clear, though: Hines does not seem to meet even the loosest, most politically loaded definition of a “vulture fund”, a nebulous but derogatory term for an institutional investor that specialises in buying oversold assets or, more often, financial derivatives at rock-bottom prices, before using aggressive methods such as lawsuits against its debtors to force a return.

High-risk ventures

Hines is a straight-up property developer, albeit one backed by massive institutional capital.

Regardless of the asset class, its business model is a world away from, say, a fund such as Paul Singer’s Elliott Management, which chased the Argentinian government through the courts for years over defaulted sovereign bonds.

Vulture funds always take on high-risk ventures. Buy-to-let development in the current Dublin property market is on a different, far-lower risk calculus. The only thing Hines has in common with a vulture fund is that it is backed by US institutions and it has attracted the ire of Irish activists.

On the one hand, this is just a meaningless spat between an ideologically driven activist and a profit-driven US developer that really should know better than to be whining about a tweet.

On the other, it is a good example of how febrile, emotive and, at times, utterly unhinged the political discourse around the Irish housing market has become. Spittle almost always rains down on the debate, drowning out reasonable arguments in favour of more polarising and catchy slogans. No wonder the State cannot figure out how to fix the housing problem. Nobody can hear anybody and everybody keeps shouting.

Journalists must bear some of the responsibility for this. We love a good bird analogy to stir things up. Liberally deploying the term “vulture fund” in articles achieves little apart from whipping up emotions to create interest.

Journalistic rot

But, handily, it also allows writers to describe funds “swooping in” or “preying” on the vulnerable as they “scavenge” to “make a killing”. It seems to be little more than journalistic rot when it appears in news copy. And now its use is everywhere.

Let he who is without sin, and all that. A quick search tells me that I have used the term more than 25 times over the last eight years, and as recently as five months ago. Many of these mentions were in column articles and it was always prefixed by the phrase, “so called”, which is designed to put some distance between its usage and the piece in question. But even talk of “so-called vulture funds” is bound to be polarising enough to undermine the usefulness of a contribution. Perhaps I have just seen the light. Hopefully it is not blinding.

In the meantime, the wearying rhetorical jousting and sloganeering around the Irish housing debate is bound to continue. There will be more rage about “vulture funds” and “cuckoo funds” (the latest avian analogy to hit the Irish market, describing funds which elbow first-time buyers from the nest/market). This week, the Government launched its latest shiny building plan, Housing for All, another trite slogan with a promise that, in all likelihood, it will not be able to deliver upon. Let the squawking recommence.