2004 saw Irish groups close major property deals in the UK and further afield, and the buying trend looks set to continue into the coming year, writes Barry O'Halloran
Mr Seán Quinn opened the bidding on what was to be a big year for Irish property investors with the €145 million purchase of the Prague Hilton in the Czech Republic.
His Cavan and Fermanagh-based Quinn Group bought the 788-room five-star property and the smaller 226-room Ibis Karlin Hotel from a privately-held US real estate company, Highbridge, and a Deutsche Bank investment fund.
At the same time, Quinn signalled that it had a €1 billion war chest for further overseas property purchases and made it clear that the UK and what were to become the EU accession states were the main targets.
But that €1 billion would not have quite covered the deal that got everybody talking, the Quinlan Private-led buyout of a very British institution, the Savoy Group.
The Savoy Group is made up of four high-profile London hotels: the Savoy, Claridge's, Berkeley and Connaught. Quinlan Private bought the group from Blackstone, the US venture capital group, for €1.13 billion.
The group - led by publicity- shy deal-maker, Derek Quinlan - and a consortium of Irish investors saw off competition from Saudi businessman Prince Alwaleed Bin Talal Alsaud, the world's fourth-richest man.
Prince Alwaleed also has a 23 per cent stake in Four Seasons Hotels, the Canadian hotel operator, and a 17 per cent holding in Eurodisney. And he was so keen to get his hands on the Savoy that five months later he teamed up with Bank of Scotland and paid Quinlan €300 million for that property alone, allowing the Irish group to recoup almost 30 per cent of its investment.
By the time that happened, both Mr Quinlan and Mr Quinn had their eyes on something else: the Wentworth Golf Club in deepest Surrey. The latter looked in poll position to buy the club with a £120 million sterling (€170 million) offer, but it was not to be.
Instead, following a tangled takeover of property group, Chelsfield, which had 60 per cent of the golf club, Wentworth was divided between that company's new owners, a partnership of Australian Group, Multiplex, and the Reubens brothers, and Mr Richard Caring.
Mr Quinlan also ran the rule over Chelsfield, but its shareholders ultimately favoured the Australians' €2 billion offer.
However, not to be outdone, Mr Derek Quinlan stayed on the trail of property deals. Last month his firm was confirmed to be in the running for the Prime Group Realty Trust, valued at $880 million (€649 million), which owns a series of landmark properties in the US city of Chicago.
Also during the year, it made a profit of €54 million on the sale of an 11-acre site in Stillorgan, Co Dublin.
But Mr Quinlan and Mr Quinn were not the only Irish investors buying property everywhere but Ireland. In September, racing magnates and Manchester United shareholders, Mr John Magnier and Mr JP McManus, emerged as the buyers of the €250 million Unilever building in London.
Limerick-based Sloane Capital, headed by Mr Aidan Brooks, completed the deal at the beginning of September. The group reportedly beat off competition from British Land, German giant CGI Deutsche Bank and the Royal Bank of Scotland.
Mr Magnier, who is master of Coolmore Stud in Co Tipperary, and Mr McManus, whose main activity is currency dealing, but who is best-known for his ownership of high-profile national hunt racehorses, emerged as its backers shortly afterwards.
Mr McManus is based in Geneva, but like Mr Brooks is originally from Limerick. This led to some speculation that their shared roots sparked what could be a very profitable relationship.
Unilever, the Anglo-Dutch group behind a range of well-known household and food brands like Persil and Cif detergents, Flora, Lipton teas and Walls ice cream, agreed a sale and lease agreement with the Irish duo.
Under its terms, Unilever will take a 25-year lease on the property with set annual rent increases. It was estimated that it would initially yield about 5.75 per cent to the new investors.
The building itself is a landmark. It is located at Blackfriars on the Embankment in central London. It is an art deco structure, and is considered to be of architectural importance. It has grade two listed status, which means that its facade has to be preserved.
Mr Magnier and Mr McManus are also shareholders in Barchester, the Irish-controlled, UK-based private nursing home chain, which took over larger rival, Westminster, in a €756 million deal in the autumn. The buyout created the largest private healthcare group in Britain, with over 10,000 beds at 163 locations.
Former Kerry Group boss, Mr Denis Brosnan, chairs the group, while financier, Mr Dermot Desmond, is another of its 140 Irish shareholders.
Along with individual investors, the institutions were also busy buying property abroad. Over the last month, the banks' commercial property funds picked up a number of warehouse and retail outlets in the UK.
However, it was not all plain sailing for Irish investors who ventured abroad. Shelbourne Developments, the company headed by businessman Mr Garrett Kelleher, pulled out of its €365 million deal to buy the landmark Lloyds building in the city of London from its German owners after discovering a fault in the structure.
It announced in June that it had decided not to complete the deal after a survey discovered alkali silica reaction (ASR) in samples of concrete from the building.
ASR is known as "concrete cancer" and one of the symptoms is cracking on the surface of an affected building. Buro Happold, a firm of structural engineers retained by Shelbourne to survey the Lloyds building, observed cracking at several points.
The problem was not fatal, but Mr Kelleher said that even a comparatively minor problem could considerably erode the premium on a building like Lloyds.
Given the amount of Irish cash that has flowed into big properties overseas, it looks like there are many other people in the Republic who will be paying close attention to their premiums next year.
