Australian financial services giant Macquarie has agreed to sell Broadstone Housing Investments, its Irish social housing and mortgage-to-rent (MTR) business, to the unit’s chief executive.
It marks a strategy U-turn for the Australian group, having failed to build up an Irish residential portfolio of scale.
Broadstone chief executive Liam MacMahon, a property consultant by background, is buying it for a nominal sum through a vehicle called Fidus Property Holdings, the sources said.
Mr MacMahon confirmed the management buyout when contacted by The Irish Times and said the plan was to focus on developing Broadstone’s MTR operation, after it secured one of three licences the Department of Housing issued to private sector firms to operate in this area early last year along with some approved housing bodies. He declined to comment further.
RM Block
MTR solutions allow defaulting borrowers to remain in their homes as renters after agreeing to surrender ownership of the property.
A spokesman for Macquarie declined to comment on the deal.
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Broadstone, set up by Macquarie in 2021, said in its latest annual financial statement published last month, that it planned to focus on the mortgage-to-rent market, after failing to build up a social housing business of sufficient size.
Broadstone had initially aimed to accumulate a €100 million portfolio of homes holding long-term leases with local authorities, approved housing bodies and other State-backed organisations. It was financed by debt from the European branch of Japan’s Sumitomo Mitsui Banking Corporation and Italian lender Intesa Sanpaulo’s Irish branch.
However, Broadstone revealed in the report that it had agreed to sell its subscale portfolio, which had been worth €5.5 million, for a knock-down price. It booked a €1.62 million impairment charge against the properties to reflect the sale price, suggesting it achieved €3.88 million.
It is understood that the portfolio contained 30-35 homes in locations such as Carlow, Athlone, Co Westmeath, and Belmullet, Co Mayo. Sources said that an entity called Irish Homes, one of three private-sector firms currently authorised to carry out MTR deals, was the buyer of most of these homes.
Broadstone also refinanced 13 apartments in Ballina, Co Mayo, with bridging finance provider Onate, according to company filings.
Some 2,742 mortgage-to-rent deals have been completed since an initial scheme was launched in 2012, on foot of a recommendation in a government-commissioned report on the mortgage arrears crisis at the time. A tweaking of the scheme in 2017 gave rise to the pilot programme that had been operating until May 2023.
Broadstone had 19 active cases at the end of June, according to the latest quarterly data, published on the Housing Agency’s website. Irish Homes had 169 active files and 92 completed.
The most active lenders participating in the MTR scheme are credit servicing firms such as Pepper and Mars Capital, which manage portfolios of mainly nonperforming mortgages acquired by overseas investment firms from mainstream banks in the wake of the financial crisis.
The volumes of cases going through the scheme are lower than what was envisaged by industry observers a decade ago – not helped by a hiatus between the end of the pilot and start of the new scheme.
The economics of the programme have also changed in recent years, as financing has become more expensive. Meanwhile, the State is now only offering to pay sector players 90 per cent of the going market rent for a property, down from 95 per cent previously. Refurbishment costs have also jumped.
Still, market rents have risen in recent years and the value of underlying properties has also increased.
It is understood that Macquarie remains interested in the Irish social housing development sector, but plans to focus on public-private partnerships (PPP).
It is also active in the educational PPPs. Other Irish interests include the Beacon Hospital in Dublin, acquired from businessman Denis O’Brien last year; Beauparc Utilities, owner of the Panda and Greenstar waste firms in the Republic; and aircraft lessor Macquarie AirFinance.
