For the last 18 months, a London-based investment firm called Valpre Capital has been snapping up what are known as pre-63 buildings in Dublin 2, 3,  4, 6, and 8. Founded by four Lebanese investment professionals, the fund has spent €25 million buying up multi-tenant houses primarily in south Dublin. This is only the start – it intends to build a €100 million residential property portfolio in Ireland. 

Despite the onslaught of Covid-19, Valpre Capital still closed its most recent deal earlier this month after it spent €7.15 million buying up yet another portfolio of pre-63 properties. It has a pipeline of three more deals at various stages of due diligence and is confident in the resilience of its segment of the property market.

But just who is Valpre Capital? And what is their investment strategy in Ireland?

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Acquired: A Pre 63 property on Richmond Row in Dublin 8 Pic: . Bryan Meade

Pre-’63s are a type of property peculiar to Ireland. They are multi-unit buildings, often redbrick or Georgian, that have been continuously let out since 1963 prior to the building regulations being issued. They are often associated with students or young professionals who have recently left home, but all sorts of people live in them.

Structurally, they are usually fine buildings, but decades ago they were divided into bedsits or studios. They are often owned by individual landlords or families who hold onto them for decades. The buildings can form part of pension funds, while many are passed down from generation to generation.

Many of these properties however have become run-down as landlords sweat them for rent, or the cost of investing in upgrading them to modern standards is simply too much for them to risk associated. Management and ownership of these properties is an area ripe for professionalisation. 

From October 2018 on, Valpre Capital began to acquire these kinds of buildings in Dublin. They are now owners of a significant number of pre-63 buildings in south Dublin with dozens of units under their control, and they hope to become even bigger as they invest in upgrading each asset they acquire. 

So far they have bought buildings primarily within the canals of South Dublin. Their portfolio spans South Circular Road, Warrington Place, Marlborough Road, Church Road, Carrick Terrace, Stamer Street, Richmond Row, and Lower Rathmines Road. They also own properties on Upper Mount Pleasant Avenue, Anna Villa, Grand Canal, and Casimir Avenue.

Valpre Capital want to invest much more in Ireland, and use it as a base to grow a European investment business. They are in the process of setting up an Irish Collective Asset Management Vehicle (ICAV) to manage their investments.  

The first strand of their business is a real estate investment fund which is what is already investing in pre-63 property. The second is a private equity fund which is targeting the pharmaceutical sector in France.

Acquired: 44 South Circular Road in Dublin 8.

So far Valpre Capital is financed by its founders and seed investors. Its management team have diverse backgrounds in finance, real estate, banking and legal spanning the Middle East, South Africa, Turkey and Europe.  

Mohamed Ali Beyhum is a former chief executive of Bankmed in Lebanon, one of the country’s five biggest banks dating back to 1944. Its second founder is Adel Jabre who was previously the country treasurer for Citibank in Lebanon, group treasurer of Bankmed and the managing director of MedInvestment Bank in Beirut.

Mazen AbouChakra, its third cofounder, was previously deputy chief executive of Oger Telecom. Dubai-based Oger has operations in Turkey, the Middle East and South Africa. The final founder is Ahmad Hariri, a former banker with Citibank, who was previously running a real estate business in the UK. 

In Ireland, Valpre Capital has been advised by financier Conor Moran. Moran, a former managing director with Key Capital, was responsible for its portfolio of private company investments. One of these investments was The Sunday Business Post, my former employer, which Key sold in September 2018. Moran had been centrally involved in preparing the business for sale prior to his leaving Key to pursue several other business projects.

The Currency caught up with two of the founders of Valpre Capital Mazen AbouChakra, Ahmad Hariri and Conor Moran to hear their story.

“There is a dislocation in Ireland between demand and supply so there is a decent yield.”

Ahmad Hariri

Ahmad Hariri and Mazen AbouChakra are in their homes in London when we speak on Zoom, while Moran is at home in Co Meath. “Our focus in Ireland is real estate,” Hariri explained. “Our model is very much to purchase the assets first and then bring investors in once we see that the assets have stabilised and our investments are performing.” 

Valpre Capital, he said, saw Ireland as its base for investment both here and in Europe. “The reason we are setting up an ICAV in Ireland is it will give us an onshore platform to manage our Irish real estate portfolio and bring investors in. It will also allow us to grow into various other sectors in other parts of Ireland and Europe as new opportunities arise.”

Despite Covid-19, Hariri said Valpre Capital had closed a €7.15 million acquisition of a portfolio of five pre-63 properties primarily in Dublin 6. “We believe in the long-term trajectory of this market, and this asset fits in well within our investment strategy,” he explained. 

Part of the value added by Valpre Capital to its investments, he said, was a capital programme to upgrade them. “We are not a development fund and don’t want to take on planning risk,” he said. “But almost every asset we acquire has a cap-ex programme tailored to it.”

A pre-’63 property on 4 Stamer Street, Dunlin D8.

This investment, he said, would allow it to do things like upgrade the BER ratings of its portfolio or ensure its buildings meet the most up-to-date safety regulations. 

“There is a dislocation in Ireland between demand and supply so there is an attractive opportunity,” he said. “That is rare to find in residential property.”

Hariri said that Valpre Capital had turned down some investments – even with high potential yields – because it was not confident in bringing these investments up to the standards it requires. “Our view from the beginning is we want to invest only in well-located assets,” Hariri said.

Valpre Capital’s investments to date, he said, were funded by its promoters and seed investors. AbouChakra said Valpre Capital was talking to institutional and other investors too about the Irish market with a view to bringing them in as stakeholders down the line.

“The area of the market we are investing in is a fragmented market,” he said. “People usually have three or four properties that they try to manage themselves. We want to upgrade the quality of these properties and bring in professional management. We want to talk to individuals or institutions interested in selling pre-’63s.” 

AbouChakra said he believed smaller properties, like pre-’63s usually are, would prove more resilient as investments in the face of Covid-19. “Social distancing is easier in them. If people, he said, are more likely to be working more from home in the future, then they will need higher quality places to live. 

“We believe pre-’63 is an asset class that can offer decent accommodation but with charm and heritage,” he said. “We also think it can deliver a good yield. We really feel we can make a difference by offering better accommodation than is currently available in the market.”

He said other property assets like retail and certain offices would undoubtedly face challenges because of Covid-19, but the dynamics of the Dublin residential market remained solid. “The fundamentals for residential properties, like what we are looking at in Ireland, are strong and won’t be materially impacted by Covid-19,” he said. 

“A lot of these pre-‘63 buildings are neglected as their owners are not institutional,” Hariri said. “They do not have the money to invest to upkeep them the way they should be. The big funds are not interested in these types of deals either as €2 million or €3 million is too small for them. But we are interested in that range.” 

Conor Moran: “Valpre Capital is professionalising an amateur market”

“One of the unique things about Valpre Capital is it is a promoter-led fund,” Moran said. “They haven’t raised a blind pool of capital to deploy. They have put their own money in up-front. When the fund gets up to a certain scale it will then be sold down to investors and the investors will have a clear visibility around what the assets are.”

“Valpre Capital is professionalising an amateur market where the typical owner might own a building through a private pension and as long as the rent gets paid they don’t worry too much about it,” Moran explained.

“These are old buildings, very often Georgian, so they require a lot of money to fix them up and make them compliant with, say, fire regulations. We want to turn bedsits into proper one- or two-bed studio apartments that ensure the fabric of the building is maintained and the building is brought up to code with proper heating and fit-out. You can only do that through being a professional investor, and that’s what Valpre Capital brings.”

With €25 million invested so far, it still has considerable fuel to do more.