Forget about Leprechauns. Irish investors are finding their pot of gold on new shores these days.
As the country’s economy booms and the euro remains strong, Irish institutional and private investors are snapping up commercial and residential buildings throughout the United States, including New York City. One of the latest deals, closed in September, was Anglo Irish Bank’s purchase for $210 million of a 373,000-square-foot tower at 222 East 41st St. from the United Nations Pension Fund.
John Myers runs a three-year-old investment management business called Ceres Real Estate that helped bring about the deal.
“Ceres Real Estate was set up primarily with the goal of investing Irish capital here in the U.S., and we’ve done a number of transactions to date,” Myers said. “There is a good appetite from Irish investors for U.S. property.”
There have always been waves of foreign buyers in New York, with the Japanese the most prominent group in the 1980s, when they purchased Rockefeller Center, and in more recent years, the Germans. Investors from the United Kingdom have always been big players, and now it appears the Irish are poised to play a significant role in the market.
“We were kind of the pioneers of bringing Irish capital here,” Myers said. “We did the first deal about two years ago.”
That transaction involved buying into a large office complex in Boston as a limited partner alongside a well-known U.S. opportunity fund, he said.
Irish newspapers have reported that developers Garrett Kelleher of Shelbourne Developments, John Walshe, Aidan Brooks, the Kelly family, John McCabe of McCabe Builders and the McCormack family are all either investors or involved in property development in the United States.
Recent transactions in the New York City region also have involved a Dublin-based company called Warren & Partners, which, forming a joint venture called Willrich Holdings with Willet Cos. L.L.C. of Rye, N.Y., purchased 150 and 200 Meadowlands Parkway in Secaucus, N.J., for $30.3 million.
The same joint venture also set price records for suburban commercial real estate assets when it closed on 55 Railroad Ave. in Greenwich, Conn., a 131,630- square-foot office building, for $97.75 million or $743 per square foot in November.
Jeff Dunne, a vice president with CB Richard Ellis in Stamford, Conn., represented the seller and found the buyer in that deal. He said that besides the great exchange rate for Irish investors, the capitalization rate on U.S. properties the annual income expressed as a percentage of the property’s purchase price is higher and thus very favorable for European investors.
“Most of Europe is oversold, meaning it’s very difficult to get much of a return, and cap rates are lower,” Dunne said. “So America looks pretty attractive, both from an exchange rate point of view and a return point of view.”
Myers agreed, but he said the strong euro is not the primary reason for Irish investment in the United States. More importantly, investors are seeking to diversify.
“There’s a lot of interest out of Ireland, and it’s primarily driven by the need for diversification to get the money out of Ireland, out of Europe, and into dollar-based assets,” he said.
Even with prices for commercial space in Manhattan being some of the highest in the world after London, Paris and Tokyo, investors expect to see excellent returns.
“What’s interesting about investing in the States now is the anticipated economic recovery,” Myers said. “We all expect or hope the economy’s going to recover pretty strongly over the next four or five years, and putting money in now is a good bet.”