Redquartz, the property group led by developer Simon Kelly, is offering investors a 12 per cent annual return on corporate bonds secured against a portfolio of assets, including Government contracts to operate accommodation for international protection applicants and Ukrainian refugees.
The group is looking to raise €2 million through a private debt placement, the proceeds of which will be used to invest in and manage various projects, according to an information memorandum from August seen by The Irish Times.
Investors are required to put up a minimum of €10,000 for a period of 24 months from the date of issuance. They will receive a 12 per cent return, or coupon payment, paid in arrears by Redquartz every quarter, the document states.
The private bond is not regulated by the Central Bank of Ireland. Because the total issue size is below the “€8 million threshold” under European Union regulations, Redquartz did not prepare a securities prospectus for the regulator to approve, it said in the document.
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Detailed in the memorandum are the assets against which the corporate bonds are secured.
They include the Forge development at Smithfield in Dublin 7, in which Redquartz has a 50 per cent interest and is leased to two medical companies, “producing €470,000 annual rent”.
Also listed among the assets is Quinn’s pub in Drumcondra, Dublin 11, which Simon Kelly and businessman Jay Bourke are in the process of reopening, having looked to raise €1 million from private investors for the project through a State scheme last year.
The “primary security” for the bond, however, is “dividend cashflows” from a related company, Woleseja Ltd, which is described as a “Government accommodation business”.
These “stable, State-backed dividends” are “valued at €8 million” in total up to 2029, Redquartz told investors and will finance the investors’ exit from the bond after 24 months.
Woleseja is described elsewhere in the document as an “emergency accommodation business”. Asked to clarify what that meant last week, Mr Kelly said the company has Government contracts to provide “refugee accommodation” to a “mixture” of Ukrainian refugees and international protection applicants.
He declined to say where the accommodation is located, describing it as a sensitive subject.
The contracts are due to commence in 2026, according to the information Redquartz has provided investors.
Asked to confirm the existence of the contract, a spokesman for the Department of Justice declined to provide any information because the details of individual contracts or negotiations “are treated as confidential and commercially sensitive”.
The Government publishes details of all payments of more than €20,000 to contracted accommodation providers every quarter.
Mr Kelly said the bond is a way for Redquartz to raise money to “capitalise” its projects.
He said the group explored the idea of setting up a real-estate investment trust, or reit, or raising money through a “public instrument” rather than a private placement.
However, Mr Kelly said these methods “have largely failed” in Ireland, because they don’t seem to appeal to enough people”.
Mr Kelly and his father, Redquartz chairman Paddy Kelly, were among the higher-profile casualties when the Irish property and financial markets collapsed in 2007 and 2008.
Their property empire, which borrowed €1 billion from Anglo Irish Bank in the Celtic Tiger era, was restructured after their loans ended up in the National Asset Management Agency (Nama). They successfully exited Nama in 2016.
