The long-anticipated sale by Nama of €300m in property portfolio loans, associated with a number of O’Callaghan Properties (OCP) assets in Cork, has been welcomed by the company itself as “very positive” and could bring fresh and further investor activity to the city.
Included in the assets covered by the six loans held by an O’Callaghan Properties associated company — and being sold by Nama under the monicker ‘Project Lee’ — are:
- A significant portion of the Opera Lane development in Cork city centre, spanning retail units and overhead apartments;
- Offices at Half Moon St, largely occupied by Apple as its city centre office adjunct to Hollyhill;
- Apartments at Lancaster Gate, on the Western Road near UCC;
- And the retail park at Mahon, next to the OCP developed Mahon Point Shopping Centre.
The Project Lee portfolio covers more than 150 apartments, all fully let since completion at Opera Lane and Lancaster Quay. Also covered by the loans are development sites at Lancaster Quay, for further apartments, and a further as-yet undeveloped commercial/retail site by Mahon Point.
First moves to sell OCP-related loans were initiated by Nama as far back as 2015, and again last year, but the move was held up several times by legal complications and by the death in January 2017 of the principal Owen O’Callaghan, at age 76. Reports of Project Lee’s value have varied from €250m, to recent media reports of as much as €330m.
The privately-owned company, established in 1969 is now actively run by Owen O’Callaghan’s son, Brian O’Callaghan.
Project Lee is being sold for Nama by financial firm EY, with reports of a €12m income stream from the assets, covering some of Cork’s best developed and located investments, primarily “dry assets”, and are expected to be bought for long-term income returns by specific funds, rather than acquired speculatively.
OCP said that it viewed Nama’s decision to put loans in Project Lee to the market “very positively”, adding that they only covered a small portion of OCP’s overall investments, loans, and assets, and only specific ones in Cork where it has been headquartered for decades.
“There was no discretion in respect of performing loans being transferred to Nama. Legislation enacted arising from the collapse of the Irish banks meant that all commercial development loans relating to these banks were transferred to Nama automatically.”
Other than the OCP associated company, Ellendale Investments, whose assets across six loans are now in Project Lee, “O’Callaghan Properties, which has extensive property interests in Cork, Dublin, and the UK, has no loans with Nama and has no other obligations to Nama”, said the formal statement.
It forecast strong interest in the portfolio “as the loans relate to premium assets in outstanding locations. The near full occupancy rate across the portfolio is a testament to the assets’ quality.”
A first round of buyer interest from ‘core money’ investor/funds is expected by EY in the coming weeks, moving then to a shortlist and a second round of binding bids.
Already, OCP has involvement with some of the world’s best-known investment funds including Grosvenor, Deka at Mahon Point and elsewhere, Patron, IPUT, Hines, and Aviva, and it is understood New Ireland is a co-investor at the Opera Lane development.
With a number of major projects planned and underway in a number of cities, including London, OCP was keen to state that none are affected by the sale of the Project Lee portfolio “and none of which are within the remit of Nama,” instancing such projects as offices being built at Cork’s Navigation Square, an office site at Andersons Quay, its residential construction developments in Cork, and at Dublin’s Liffey Valley or at West Dublin’s SDZ site at Clonburris.
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