Dermot Desmond, Paddy Kelly and Bank of Ireland's Brian Goggin profited while others lost out

Irish banks sell their properties at the right moment

Before the downturn in the property market, Bank of Ireland and AIB engaged in large-scale property disposals, achieving record yields in the process. Now, many of those properties would achieve 33% less based on the movement on yields in the meantime.

AIB sold part of its Bankcentre site at Ballsbridge in Dublin 4 to the Serpentine Consortium, private individuals assembled by the bank and its stockbroking arm, Goodbody, for €367.75m in cash in 2005 as part of a sale and leaseback deal. The bank said the deal would make it a profit of about €160m over three years.

The following year, the bank decided to sell the existing offices at Ballsbridge for €377.7m cash, this time to property developer Seán Dunne and Hibernian Life and Pensions. It later tried to sell its remaining land there, where it intends to develop another office block, for about €150m but a deal was never concluded.

Other deals by AIB included the sale of 12 branches in 2006 for €100m to developer Gerry Gannon, representing a yield of 2.8%.

Bank of Ireland was also disposing of property at the time, selling its Baggot Street headquarters to Derek Quinlan and Paddy Shovlin for €200m. In late 2006 the bank agreed to a sale and leaseback deal on 36 premises for just under €240m. Half of the 36 branches were bought by Bernard McNamara, Quinlan Private and Friends First.

Developer Joe Layden bought a portfolio of branches from the bank for €94m and fellow developer Frank O'Malley bought the well-known branch at Eyre Square in Galway for €18m.

The banks have since been crucified by the stock markets for their commercial property lending exposures but the disposals strengthened their balance sheets just prior to the market slowdown.

Neil Callanan

Goldman Sachs makes a windfall on subprime meltdown

Goldman Sachs, the US investment house, has always had a slightly mystical aura and Wall Street's regard for this "bulge bracket" bank increased hugely in 2007 when, almost uniquely, it managed to profit from the subprime meltdown. Ironically Hank Paulson, US treasury secretary and former Goldman Sachs CEO, is now the man trying to clean up the sub-prime mess.

Thanks to a tiny group of bright traders, many of them in their 30s, the bank took a bet that securities backed by US subprime mortgages would tumble in value and the bank reaped a profit of almost $4bn as a result. Its success came at a time when peer companies were losing billions by taking bets in the opposite direction. To date Goldman Sachs has taken write-downs of $3.8bn. Compare that to the wounding losses at Citibank, where $55bn has been written off.

Goldman Sachs CEO Lloyd Blankfein said the bank was nimble and able to respond quickly because of its reliance on "war gaming" strategies. But the bank's nimble movement has not been universally welcomed by all investors, with many pointing out that the bank profited on subprime products by underwriting instruments, like Collateralised Debt Obligations (CDOs), which tumbled in value subsequently.

Goldman's master stroke was to see early that CDOs and other securities were in real trouble and, at the very least, try to hedge its bets by effectively shorting the US housing market.

Emmet Oliver

Dermot Desmond avoids infrastructure slump with London airport deal

The year is 1995 and Dermot Desmond shells out £23.5m for London City Airport to British building group Mowlem. The transaction gets scant attention in the Irish media. The airport handles barely 500,000 passengers and takes only small aircraft which are able to operate on the basis of short take-offs and landings.

It's dwarfed by its bigger rivals, Heathrow, Gatwick, Stansted and even Luton, and is regarded as a small-time operation purely there to facilitate a trickle of private jets and commuter aircraft that want to access the City from the east.

However, by 2006 the airport is able to boast 2.3 million passengers and a lucrative connection to the London Underground via its own Docklands Light Railway (DLR) station. This astonishing growth in a decade is enough to deliver a bounty to Desmond, who sells out for a reported price of £750m. The 3,000% return on the deal is astonishing and one wonders if buyers American International Group, Credit Suisse and GE Infrastructure paid too much? Time will tell.

Either way Desmond's timing was immaculate: valuations for major pieces of infrastructure have dropped sharply since 2006 and the British government has finally agreed that other airports in the London area should expand, potentially curbing the runaway growth of London City.

Emmet Oliver

Bank of Ireland gets
out of stockbroking
just in time

On 1 November 2006, when Bank of Ireland announced it was exiting from Davy Stockbrokers, the country's biggest stockbroker, the Iseq was standing at a proud 7,494 points; by the middle of last week it was skating below 4,400 points, a painful drop of 41%.

While there were a myriad of reasons for Bank of Ireland's sale of its 90.44% stake to Davy management and staff, it checked out of Davy just in time to avoid the 2007 Iseq slump, never mind this years horrendous rerun. No wonder banks have a reputation for having a sixth financial sense.

The sale price was €316m. The bank made a €225m killing on this after tax. It acquired its original shareholding in 1988 and when it sold the stake to Davy management and staff in 2006, Bank of Ireland CEO Brian Goggin wished them well "in the future development of the business".

Well he might, as stockbroking has been a less profitable trade since the sale by Bank of Ireland, with losses on Contracts for Difference (CFDs) particularly hitting major brokerages.

Davy said this July it needed to lay off up to 15% of its staff and was also seeking pay cuts from the remainder due to lower trading volumes. Over 100 staff bought shares in the company when it bought out Bank of Ireland and these stakes must have seriously reduced in value, although the shares are not traded publicly so its difficult to know what price they trade at.

To be fair, Davy did the MBO so staff could get their hands on equity which was previously locked up in Bank of Ireland. The key members of Davy – director Kyran McLaughlin and managing director Tony Garry – have pulled off some of the most impressive deals in Irish business over the last decade. No doubt they will extract value from the MBO transaction in time, but it may take a lot longer than was originally envisaged. Meanwhile Bank of Ireland is laughing all the way to the...

Emmet Oliver

Estate agents sell
out at the top of
the market

Estate agents are suffering at the moment, with layoffs or "natural wastage" the norm in most firms. Sales are down, deals are taking longer and when they are agreed a lack of finance can leave them unconsummated.

Some agents, however, sold out at the right time, with a number profiting from the eye-watering price paid by the Irish Times for, the property search website. Valued initially at €15m to €20m, Myhome was acquired at an up front cost of €45.78m with a further €11.05m payment conditional on performance between 2009 and 2011. The Irish Times Ltd took on non-recourse debt of €10m to part-fund the transaction. Sherry FitzGerald and Douglas Newman Good were amongst the beneficiaries.

Separately, several other estate agents sold out at the top of the market. The former Gunne estate agent sold its commercial division to CBRE, while Gunne Residential and Gunne Financial Services were sold to other investors. London agent Savills bought HOK for €50m, while Colliers CRE increased its stake in Colliers Jackson Stops. Knight Frank bought Ganly Walters for €10m and Atisreal bought Harrington Bannon for the same price.

Neil Callanan

Landowners sell assets to maximise their returns

Property markets are cyclical, and while many developers are suffering in the current downturn, a number of landowners sold assets at a time that maximised their return.

The best example of this is probably at Millennium Park outside Naas in Kildare, where developers Dermot O'Rourke and Gerry Conlan sold about 400 acres to Gerry Prendergast, Paddy Sweeney and Tom Considine for €320m in 2006. At the time it was the largest transaction involving development land in the history of the state.

Kildare County Council has commissioned a master plan which will set out the future development of the 400 acres acquired by the consortium and some adjoining lands and they will develop the land in the future.

After disposing of the land, O'Rourke's family trust agreed to forward-fund a €60m landmark office building at Heuston South Quarter, while the trust also acquired the headquarters of luxury retailer Hermès in Paris. Conlon has moved into healthcare and bought properties in Wicklow and Dublin.

In Dublin 4, meanwhile, Paul Coulson's South Wharf and Dublin Port sold the former Irish Glass Bottle factory site at Ringsend for €412m to a consortium made up of Bernard McNamara, Derek Quinlan and the Dublin Docklands Development Authority. The 24-acre site was valued last week for the Sunday Tribune at €300m by a leading industry expert.

Landholders who sold out of Sandyford before the present planning ban have also benefited. Among them is David Agar, who bought a four-acre site in Sandyford for €14m and sold it 15 months later for close to €100m, or €25m an acre. Land prices there now are well below €15m an acre. Treasury Holdings also made millions by selling sites there in recent years.

Neil Callanan

27 shareholders of the Leinster Leader group sell to Johnston Press

Back in September 2005 there was excited talk throughout the Irish newspaper industry about a UK invasion, with major British regional groups sweeping into Ireland to hoover up the best regional assets and reducing the established players – Thomas Crosbie Holdings and Independent News & Media – to mere bit players. Three years on the British invaders, most notably Johnston Press, could be forgiven for beating a hasty retreat as the industry looks back, askance, at the prices they paid for their assets.

In August Johnston Press took a £109m (€136m) charge against the value of the assets it acquired in recent years and admitted papers it acquired in the Republic and Northern Ireland were accounted for within this figure. The biggest of these purchases was the Leinster Leader group, which was sold for €138.6m. This price astonished the industry and some of the losing bidders, including the Irish Times. It was reported that Johnston paid a multiple of 17 times earnings before interest tax depreciation and amortisation (EBITDA) based on 2005 numbers.

The 27 shareholders of the Leinster Leader group may have been astonished at the price too, but either way they sold and among the beneficiaries who must be sitting pretty now are solicitor Anthony Collins and liquidator John McStay.

To add insult to injury for Johnston, local newspaper circulations have plunged since then, with the Leinster Leader, among the flagships, diving by 8.6% in the six months to June. Emmet Oliver

The government perfectly times the
sale of Aer Lingus

The privatisation of Aer Lingus once seemed impossible. Attempts to float the airline on the stock exchange indirectly claimed several victims before it actually happened, including ex-CEO Willie Walsh and the then Minister for Transport, the late Séamus Brennan.

While the government may have plucked the date of September 2006 out of the political sky, the decision to have the IPO at that point in the economic cycle was inspired, however inadvertent. The government got the long-opposed sale away very successfully at a float price of €2.20, valuing the company at €1.4bn. Last week it was worth just €846m.

It managed to spread the equity among staff, retail investors and Irish institutions and initially the shares performed very strongly. In fact Ryanair's failed bid several days later (at €2.80 a share) only added to the gains of those ground floor investors.

The government pocketed €644m from the IPO in 2006 and one can only wonder how much smaller the figure would have been if it had waited a year longer and floated Aer Lingus in September 2007.

Of course Ryanair argues that the real losers are Aer Lingus shareholders who didn't accept its offer in September 2006. This is true, with any long-term investors now sitting on huge paper losses.

However the exchequer was stuffed full of Aer Lingus IPO proceeds by the end of 2006, a year before the oil price spike and the credit crunch in the US – a key long-haul market for the airline. In fact if the government had waited just a few months later a float might not have been possible at all.

Emmet Oliver

Paddy Kelly exits ISTC before it racks up
record losses

Specialist finance house International Securities and Trading Corporation (ISTC) racked up the largest cash losses in Irish corporate history after a series of margin calls left it nursing liabilities of about €850m. Set up by former Anglo Irish Bank senior executive Tiarnan O'Mahoney, some of the country's most affluent people invested and suffered significantly when the lender was bought by London investment bank Collins Stewart for €5m and renamed Collins Steward ISTC.

Not all the original investors in the vehicle suffered, however. Property developer Paddy Kelly and his family sold a significant part of their stake in ISTC before the lender entered the crisis and are understood to have doubled their investment.

Neil Callanan

Publicans capitalise on 'alternative use' values

In the great land race, pubs became a favoured target of developers looking for land that had a higher "alternative use" value. Hotels, petrol stations and even funeral homes became sought-after because of spiralling residential and commercial property prices. Publicans in particular benefited, because many of them had car parks that were no longer needed because of drink driving legislation.

Select Retail Holdings, the consortium that owns Superquinn, bought several pubs including the Four Provinces in Ranelagh, McGowans in Churchtown which sold for €16m (€6m more than the guide price), Keatings at Mary Street and the Greyhound in Blanchardstown. It also bought the Foxhunter, a Lucan pub on 3.1 acres on the main Dublin to Galway Road, for about €17m.

Arnotts was another retailer to acquire pubs, snapping up K3 at Abbey Street for as much as €10m, according to sources.

Neil Callanan