Irish property managers have teamed up with a mid-sized British vulture fund and raised finance from a leading Wall Street investment bank to assemble a portfolio of hundreds of individual rental apartments across Ireland’s main cities, an investigation by The Currency and the Dublin Inquirer reveals.

Their business, called iLiv, is based in Dublin and led by directors Padraic O’Reilly and Jarlath Moran. O’Reilly acts as chief financial officer, a position his LinkedIn profile indicates he also occupies at Bua Private and Horizon Sports Management, two companies controlled by businessman Conor Ridge.

Horizon Sports grew to represent some of Ireland’s highest-profile athletes until an acrimonious split from former client Rory McIlroy led to a 2015 courtroom battle between Ridge’s firm and the golf champion – and a settlement payment from McIlroy to Ridge’s firm.

Along with O’Reilly and Moran, Ridge is an investor in iLiv through his investment firm Bua Private, though he does not occupy a director’s seat nor claim any executive role. O’Reilly and Moran declined to be interviewed for this article.

After an early career in Dublin property, Moran brought local expertise to the iLiv project. He claims the title of chief operating officer. In 2019, he and O’Reilly established a new company called iLiv Apartments (Ireland) Ltd. Over the following year, Moran joined a property management company newly established by south Dublin estate agents Kelly Walsh. He then took it over and renamed it as part of a growing group of related property holding, management and financing companies under the iLiv banner.

Housing Assistance Payment records show that when iLiv began trading in 2020, it received payments for its tenants at the address of Kelly Walsh. Its address, however, is now the same as that of Ridge’s Horizon Sports and Bua Private in Castlewood House, Rathmines.

By August 2020, a complete, independent structure was in place under the ownership of Moran, O’Reilly and Ridge – and they had found a financial backer.

Click image to download the full-size corporate map.

Debt charges registered by iLiv show that it then started to borrow funds from Spear Investments UK DAC, an Irish subsidiary of Arrow Global Group. “Arrow Global declined to comment,” a spokesperson for the group said in response to questions about iLiv.

Arrow Global is best known in Ireland through its debt servicing agency Mars Capital, which has been collecting non-performing debt offloaded by AIB to investors including US investment bank Morgan Stanley. More broadly, Arrow Global reported €5.3 billion in funds under management at the end of September 2022 and describes its business as follows:

“Arrow Global is a European investor and alternative asset manager specialising in credit and real estate.

“We identify, acquire, and manage secured and unsecured loan and real estate portfolios from and on behalf of financial institutions, such as banks, institutional fund investors and specialist lenders.

“We play an active role in helping financial institutions reduce their balance sheets and recapitalise in order to increase mainstream lending. By purchasing and managing non-performing loans and other non-core assets, we provide valuable capital and expertise to a growing European market. We are a regulated business in all five of our European markets.”

This focus on distressed debt classifies Arrow Global as a vulture fund. In the case of iLiv, however, the credit advanced by the British investment firm has not gone towards the acquisition of bad loans. Instead, the funds are going straight into the residential property market.

Accounts filed to the end of 2021 show that, through tax structures in Jersey and Luxembourg, Arrow Global had advanced €60.7 million in intercompany debt to Spear Investments. This Irish unit then allocated the funds to iLiv property acquisition vehicles north and south of the border. 

As of December 31, 2021, iLiv Apartments (Ireland) owed €29 million to Spear Investments against apartments purchased in the Republic. Meanwhile, starting in April 2021, iLiv Apartments (UK) had raised another €23.1 million through the same channel to acquire properties in Northern Ireland.

Arrow Global injected another €4 million credit into the holding companies bringing the structure together, and held a further €11 million facility available to iLiv on that date. The type of loans advanced to the central company iLiv Apartment Holdings Ltd (IAHL) are quasi-equity. They ensure that, although not a current shareholder of iLiv, Arrow Global is the true owner of the entire project, as reported by Spear Investments: “The Company controls its subsidiary, IAHL, through the rights arising from its convertible debt interest investment which permits the Company, at any time, to take a 92.5 per cent controlling interest in that company.”

Enter Morgan Stanley

The figures to the end of 2021 were reported shortly after another backer had joined iLiv. In September 2021, Morgan Stanley Investment Managers refinanced part of the funds that Arrow Global had initially advanced. The Wall Street bank’s asset management arm invested in the project through senior loans advanced by its New Haven Secured Private Credit Fund.

By the end of that year, iLiv’s unit tasked with acquiring apartments in the Republic owed €27 million to this lender. This was just the beginning, with this initial amount much smaller than those typically able to catch the eye of the investment bank. Morgan Stanley Investment Managers did not respond to a query emailed to its Irish office.

With apartments valued at €51.8 million in the Republic at the end of 2021 and valuations yet to be reported in Northern Ireland, iLiv was, and remains, in the ramp-up phase of an acquisition spree intended to assemble an all-island rental apartment portfolio by 2025. “The Company’s Project iLiv investment is intended to be held for a period of five years,” Spear Investments disclosed. 

Buying from all types of sellers in the Republic’s cities

In the Republic, Land Registry records searched on January 4 showed that iLiv was the registered owner of 220 apartments and had applications pending on 94 others. All properties were in the four largest cities except two in Clonee, Co Meath just outside Co Dublin.

The acquisition drive is ongoing – despite the Christmas holidays, iLiv had become the registered owner of five more apartments in the previous three weeks alone, and lodged Land Registry applications for six others. This included the first record for Iliv Apartments Ireland (2) Ltd, a new subsidiary that completed its first acquisition in Tallaght a few weeks after its establishment in October.

Unlike many institutional investors, iLiv has not bought any full apartment blocks. Instead, the business has been scouring the market for isolated units or groups of a handful of apartments going on sale at a time. This places it in direct competition with individuals looking for a starter home or small landlords.

Its single largest acquisition was the purchase of 12 apartments for €2.4 million in Cherry Orchard’s Killeen Hall in Dublin in July 2021. iLiv bought them from Brennan Homes, the developer that had built the complex 15 years earlier and retained a portion of the 29 units as investment properties until then. When Brennan advertised them for sale, they had an annual rent roll of €175,000.

A random sample from iLiv’s portfolio shows that it has been buying from the widest possible range of sellers. A €220,000 two-bed apartment in the Drynam Hall complex of Kinsealy, north Co Dublin came from its previous owner-occupier last October, as had a €250,000 unit in the city centre’s Gandon Hall two years earlier.

Moving south of the Liffey, iLiv paid €215,000 for a one-bed apartment on Francis St in the Liberties at the start of its purchase spree in December 2019. The property was previously an investment held by Standard Life. A short walk away and one year later, the company acquired another one-bed for €210,0000 from a small business called Host my BnB Ltd. 

In March 2022, iLiv bought 10 one-bed apartments in Waterford’s Railway Square complex for €1.3 million. It has since re-let one of them at an asking price of €1,100 per month following renovation. The seller was a unit of GIC, the sovereign wealth fund of Singapore’s government, which owns hundreds of residential properties in Ireland.

100 apartments and counting in Belfast

When iLiv expanded to Northern Ireland in April 2021 with Arrow Group’s initial €23.1 million funding, debt charges revealed that their first acquisition was a group of 25 two-bed apartments in the recent Portland 88 complex on Belfast’s Ormeau Road.

By March 2022, the Belfast-registered company iLiv Apartments (UK) Ltd filed fresh debt documents indicating it had refinanced by raising senior debt from an unnamed lender represented by the same agent and under similar terms to those previously used by Morgan Stanley IM in the Republic. Although iLiv Apartments (UK) has yet to file accounts detailing its funding, there is every indication that the Wall Street investment bank is now backing the project in Northern Ireland, too.

On the occasion of last year’s refinance, the portfolio offered as collateral had grown to 104 homes. In its first year of operation in Northern Ireland, iLiv had added another 17 apartments in the Portland 88 complex; seven in the FX Building and 26 in College Court Central, both within a short walk of Belfast City Hall; nine units at 117 University Street near Queen’s University; eight at a suburban complex on Belfast’s Saintfield Road; and 12 in the Cotton Hall development in nearby Bangor, Co Down.

Northern Ireland’s land registry does not allow real-time searches, but there is no reason to doubt that iLiv acquisitions in the Belfast area have continued. For example, it recently advertised a newly acquired two-bed apartment on Malone Avenue near Queen’s University for rent at £1,300 per month.

On an all-island basis, documents filed by iLiv and land registry information show that, halfway through its five-year investment horizon, the business has purchased well over 400 apartments and counting.

€2,400/month for a two-bed in Finglas

Of this portfolio, the group’s internal letting agent iLiv Apartments Property Management has found tenants for a majority of homes. Its website lists 281 adverts, most of them let-agreed. 

While many of them are those where iLiv is the registered owner or has an application pending with the Land Registry, there are exceptions. For example, several Dublin apartments on Francis Street and one in the Gallery Quay development in the Docklands are advertised as having been let out by iLiv but are owned by Copa Propety Holdings. This company, partly owned by O’Reilly and ultimately controlled by Ridge outside iLiv’s ownership structure, also owns the Rathmines office where their companies are located.

Only five homes were available to let from iLiv in early January, all for furnished apartments in Dublin ranging in price from €1,850 per month for a one-bed in Cherry Orchard to €2,400 for a two-bed in Finglas.

iLiv adverts display a standardised finish after renovations.

Photographs show that all properties iLiv recently offered to tenants were renovated to a standardised design featuring the same furniture, kitchen and bathroom fittings, including high-end appliances such as Neff ovens and Nespresso coffee machines.

A number of properties were never advertised. For example, none but one of the ten units in Waterford’s Railway Square appear in iLiv’s let-agreed listings. This suggests that their acquisition from GIC was completed with tenants in place. 

Similarly, only a handful of apartments in iLiv’s Northern Ireland portfolio have appeared on property lettings websites. With all northern acquisitions reported to date conducted in groups of several units, the business seems to have bought from existing Belfast commercial landlords with tenants in place.

 “They’re nice because they allow pets here.”

Anastasia Bodrova, iLiv tenant

Dublin’s Killeen Hall is a complex of two blocks that sits on the banks of the Grand Canal overlooking a landscape of warehouses and industrial estates. Most of iLiv’s 12 apartments there haven’t been advertised for rent since they were bought and long-term tenants are still in place. But the iLiv website does show two refurbished two-bedroom apartments in the complex listed for €1,800 and “let agreed”, and a one-bedroom apartment available at the moment for €1,850. 

According to residents, those who moved in after a flat was vacated and renovated are now paying around 50 per cent more than tenants who have remained in place through iLiv’s acquisition of their apartments. 

In Killeen Hall, and elsewhere in the city, tenants generally said they have so far found the landlord to be responsive when it comes to maintenance and easy to deal with. “They’re nice because they allow pets here,” said Anastasia Bodrova recently, just inside the doorway of her one-bed apartment in a red-brick apartment building on the corner of Ward’s Hill and Newmarket in the Liberties.

iLiv owns two apartments in the Newmarket Square building in Dublin 8. Photo: Lois Kapila

In the next two and a half years at most, iLiv will spend all the money Arrow Group and Morgan Stanley are willing to invest buying more apartments across Ireland and ensure they are in a good state and fully let.

The big question, then, for its tenants and for the wider property market is what happens when the two backers hit their five-year investment horizon in 2025 and call their money back to return capital to their own investors. In its 2021 accounts, Spear Investments provides the answer:

“The loans are expected to be repaid during the five-year period. Regarding the convertible debt, the Company also expects to have exited from this investment around five years from now by cash settlement in accordance with its contractual terms, sale of the investment to another party or exercise of the right of conversion into ordinary shares and sale of those shares to another party.”

The entire portfolio is to be sold and the structure detailed in the corporate map above shows that the properties are being packaged to attract the widest possible range of prospective buyers. Investors may bid for any of the apartment-owning vehicles – slice number one or two in the Republic, or the self-contained UK-registered company holding properties in Northern Ireland. They may go for any combination of the above, or the whole package by purchasing their common holding company outright.

The property management subsidiary run by Moran and O’Reilly sits outside this central holding structure, ensuring that they will be best placed to keep running the portfolio locally on behalf of its new owner – most likely an overseas investment fund that will happily have the day-to-day management of tenants and maintenance taken off its hands.

Unlike the common forward sale of entire newly built apartment blocks to landlord investors by their developers, there is less of a history for this kind of deal in Ireland. As Sean previously reported, the assembly of scattered individual homes into consolidated investment portfolios has been more of an American business so far.

Who will buy the final portfolio?

Yet there is precedent in Ireland. Singapore’s GIC, as mentioned above, has acquired individual Irish homes as well as apartment blocks through its Vestry ICAV, with local management provided by veteran Dublin property investor Richard Moyles and his partner Andrew Gunne through their company BEO Capital.

They are already connected to the backers of iLiv – GIC’s Irish operations and BEO Capital have their address in the same Georgian house in Dublin 2 that is home to Kelly Walsh, where Moran started iLiv. And GIC has already bought Irish commercial property from Morgan Stanley IM in the past. 

In another example, The Currency and the Dublin Inquirer both reported in the past on the Belgrave Collection whereby Dublin property firm Lugus Capital, funded by Bain Capital, bought dozens of Georgian houses spliced into studios and small apartments south of the city centre and converted them to 265 higher-yielding modern apartments before selling the fully let portfolio to the Dutch investment firm Orange Capital Partners in 2018. This was the first investor-to-investor sale of a scattered portfolio of several hundred second-hand rental properties made public in the Republic.

Orange Capital Partners added to its Irish portfolio the following year, when it bought roughly another 180 apartments spread across different properties from Bain and Lugus’s Belgrave II portfolio. In 2020, it topped up again with another 85 apartments.

Companies controlled by Sonia and Declan Gleeson and backed by Irish investors and lenders replicated this model in 2019, when they sold the Circle Collection to the US-based institutional landlord Heitman. When agents Savills advertised the Dublin portfolio of 27 buildings divided into 213 apartments for sale at a guide price of €46 million in 2019, they described it as pre-63 properties improved through “an extensive programme of refurbishment”, just like the Belgrave Collection before it. 

While there have not yet been publicly disclosed examples of foreign investors assembling individual units in relatively modern Irish apartment blocks on the scale achieved by iLiv without taking over or refurbishing the whole building, the cases above show that there has been no shortage of overseas buyers for fully tenanted and locally managed scattered portfolios in the private residential sector. 

GIC, Orange Capital Partners and Heitman are just examples of the property fund managers that will form the primary audience for the iLiv pitch when it is ready to go on sale.