Irish investors looking for a stake in commercial property ventures will shortly be offered new opportunities when a London-quoted firm seeks a Dublin listing.
The company, Howard Holdings, is expected to list next January or February. Its shares are trading on the FTSE at around 28p sterling each. Howard Holdings has projects worth around £92 million under development in Britain and Ireland.
Howard's executive chairman is Irishman Frank Gormley, who holds around 3.4 million shares. Brendan Murtagh, deputy chairman of Cavan-based building products group Kingspan, owns four million shares.
According to Mr Gormley, five Irish directors, who include Greg Coughlan, hold around 40 per cent of the 26 million shares in issue. Following the listing, for which documentation is currently being prepared, the company will probably carry out a public share offering later in 1999, to raise funds for further expansion.
Mr Gormley and his partners bought into Howard about four months ago. The company was, he says "a small, sleepy, but fairly tightly controlled little business". He declined to reveal how much the directors paid for their shares.
Howard Holdings usually develops schemes with joint-venture partners. It provides the expertise in areas such as planning and sourcing funding for the venture, usually working closely with the landowner.
Its current projects in Ireland include the Balbriggan Business Park, a project valued at £18 million, which it is developing in conjunction with the Doyle family who are in the oil and heating business in Swords, Co Dublin. The 12.5-acre site will include 200,000 sq ft of business units, a petrol station and a shop. Also in north Dublin, it is involved in a £10 million project to build a 600 space multi-storey car-park, using tax-based private financing raised through Davy Stockbrokers.
In Cork, it is involved in a mixed development at Sharman Crawford Street, which will include a 400-space multi-storey car-park, 6,500 sq ft of retail space and 35 apartments. Its portfolio in Britain includes a £20 million sterling project at Borough Street, London, involving 41 apartments and 34,000 sq ft of commercial and retail units. Last week, it launched a £10 million project at Marylebone, London W1. It is a mixed development of 20 apartments ranging in price from £225,000 to £500,000; 13 have already been sold. Howard also has a housing scheme at Wigmore, in Kent, valued at £2.5 million and further residential housing development valued at £4 million.
Mr Gormley said Howard would provide new opportunities for investors. It will concentrate its commercial investments between Britain and Ireland, but will also look to new opportunities in eastern Europe, especially Poland.
"There are a large number of Irish people who would like to invest in the UK property market, but they have very little choice," he says. "They also feel that because its `over there' it is more hassle and more difficult to manage". He says that investing through a company such as Howard will cut out such hassle and bringing the company to the market will give investors more choice.
At present, three publicly quoted companies in Ireland concentrate on property. They are Green Property, which has property interests in Ireland and Britain, including Blanchardstown Shopping Centre; Dunloe-Ewart, which merged earlier this year and has properties in the North and the Republic and Jermyn Investment Properties, the Dublin and London listed property company. Jermyn said earlier this year that its Irish property portfolio had a value of £100 million sterling. Its assets include the Stillorgan shopping centre.
Mr Gormley, who trained as a chartered accountant with KPMG (then known as Stokes Kennedy Crowley), and worked in property investment in Britain for 10 years, says the UK market is unsettled, but is "solid, and a very attractive place to invest". He says the yields are good, and in London's fashionable West End, are double what they are in Dublin. "Capital values are the same or lower," he says.
Mr Gormley believes that with interest rates due to come down, yields in Britain will look very attractive and he forecasts that property values are almost certain to increase.
Howard has carried out a number of tax-based car-park developments in Ireland. Mr Gormley says the Government was right to curb the schemes, but believes tax incentives are valuable and should continue to be used in other areas where they can help development.
He believes there are still significant development opportunities in Ireland, especially in Cork, where the company has a very strong presence. "Cork hasn't developed as quickly as Dublin, Limerick or Galway," he says, "and it still has plenty of development potential."
The company will also look to eastern Europe. He says that with EU grants and tax incentives, it has become a more attractive proposition. Howard is currently exploring several development opportunities.
The company's shares have risen from 18p to 28p in the past few weeks, possibly Mr Gormley thinks, because of media coverage on its activities. He says at 28p, the shares are still selling a substantial discount to net asset value (the book value of its assets) which is about 35p.
Howard also has a small investment portfolio, the value of which, he says, has doubled in the past 12 months. It buys properties which it believes are under-utilised, re-lets them and then sells them on.
Howard did not show a profit in the year to April last. This is because the company was restructured and there were a number of plant closures, asset write-downs and redundancies, according to Mr Gormley. In previous years, it made money, although 1989 was its best year, with a £1.8 million profit.
Mr Gormley says that this year Howard's turnover will rise from £5 million to £15 million and £30 million in 2000. Raising funds, he says, will be part of the strategy. "We are a small company and we'll need to expand," he says.
