Glenveagh Properties has forecast prices of its newly built homes will rise 5% or 6% a year and the housebuilder has identified huge opportunities to acquire parts of €5bn in big-ticket land banks it believes will come on the market in the coming years.
The housebuilder, which became the second housebuilder to list on the Irish Stock Exchange when it sold shares for the first time last October, said it has the “financial firepower” to acquire more sites in its core market of the Dublin region while also buying in Limerick and Cork.
The company said that among potential sellers of the land banks were the equity or vulture funds and that there were few housebuilders “with the cheque book” afforded Glenveagh after it raised €550m in its initial public offering.
Glenveagh has identified a potential total of €5bn in land sales in the next five years, including €800m by US equity firms; €500m from religious orders; over €1bn from Nama; as well as €2.5bn in other State-owned sales.
It said it acquired two “substantial” land banks which will in time deliver 2,235 homes across seven sites when it secures planning permission. The company is close to buying a further site, while a €250m debt facility raised from three banks, HSBC, AIB and Barclays, will help the company to finance the building on the sites, it said.
Justin Bickle, chief executive and one of its three “co-founders”, said its two operations, Glenveagh Homes, its core operation which builds and sells houses, and Glenveagh Living, which builds rental properties, makes it more resilient to manage the rise in interest costs in future years.
Having surged in their first day of trading in October, the shares were little changed in the latest session, and the firm is valued at over €743m.
After Cairn Homes, Glenveagh was only second housebuilder to list on the Irish Stock Exchange. Cairn shares were up 2.5% yesterday, valuing it at €1.4bn.
Glenveagh Homes is building 700 housing units and had spent money selectively in Limerick, Galway, and its Maplewoods site in Co Cork. Its focus would remain on the Dublin region, where it plans to buy land along the commuter rail and road links. It repeated that it plans to have completed 1,000 units in 2020 and to reach its target of earning a gross margin of 20%.
Its debut earnings reflect the one-off €47.5m costs of “the founder shares” set aside at the IPO for the “co-founder” shareholders, which include Mr Bickle; chairman John Mulcahy, the former senior Nama executive, and Stephen Garvey, the company’s its chief operating officer.