ONE MORE THING:WITH NOTHING much stirring in Ireland, developer and financier Simon Kelly appears to have switched his attention to Canada.
In March, Kelly, son of developer Paddy Kelly, circulated a document regarding a funding gap in a large condo project in Toronto called River City.
Equinox Investment Holdings had to provide a letter of credit to the value of $4 million (€2.76 million) to HSBC as additional security for the bank as the senior lender and to DB Mortgage Investment Corporation, the mezzanine lender. HSBC advanced $64 million for the project from overall funding of $96 million.
In his note, Kelly said he was looking for a high net-worth investor to provide $2 million of this funding on a preferred basis.
“The risk on this is very low and I think that it may be a useful way for an investor to get leverage on an existing property asset,” he said. “They may own an ungeared asset in Ireland, which they do not want to sell at these distressed levels.” Kelly said the funds could “only be called upon in very extreme events of default”. The “ultimate risk in the project lies with the apartment purchasers”.
This language had echoes of the boom, when every property investment proposal was pumped up. Kelly said the security would be released when the first condo was occupied in advance of the debt repayment and project completion.
“Contracted arm’s-length sales” were achieved for 275 condos – about 79 per cent of those available in phase one. Construction was to begin in June with completion slated for mid-2013.
Kelly could not be reached for comment so it is not clear if he secured the funding or if an Irish investor stepped up to the plate.
Given the destruction of wealth here in recent years and the collapse in the value of many overseas property investments, it can’t have been an easy sell.
