Dublin-based non-bank lender Relm Finance, which is backed by Irish businessman Richard Barrett and New York-based investment group Avenue Capital, signed its 40th loan deal last week, providing just over €6.5 million in funding for the acquisition of Barnacles Hostel in Temple Bar.
Barnacles was acquired recently from the John Lally-led MHL Hotel Collection for about €9 million, including costs, by MM Capital, an Irish property investment and development company founded in 2013 by Peter Leonard and Derek Poppinga.
The new owners have since signed a 25-year lease with the Irish hotel group Key Collection, which is planning a refurbishment of the building. This will involve changing the existing 35 hostel dormitories and common areas into 45 individual hotel bedrooms. MM Capital are expected to achieve a yield of 7 per cent from the Dublin property.
Relm has provided the finance on a five-year term, having previously backed Mr Leonard and Mr Poppinga in a retail investment in Gorey, Co Wexford.
Chief executive Paul Dowling said the deal was highly attractive to Relm. “Firstly, the owners are good operators with a great track record,” he said. “The property itself is in an excellent location and a tourist hub. The downside risk is pretty small provided you get a good tenant, which Key Collection is.”
Relm’s record
Relm, launched in the middle of 2017, had provided about €200 million in funding for various property deals by the end of last year with another €40 million “loans in docs”, waiting to be signed off and drawn down. “We focus on covenants and cash-flow lending,” Mr Dowling said.
Mr Dowling expects Relm to have achieved about €300 million in lending by the end of this year. Funding is provided by Avenue Capital.
“We are definitely looking to do another €100 million this year in property lending,” he said. Mr Dowling said Relm was not “holding off” on lending in spite of the uncertainty caused by Brexit. “There doesn’t seem to be a significant amount of slowdown in the market.”
Relm, which stands for Real Estate Loan Management, is led by three experienced former AIB executives: Mr Dowling; head of origination Armand Lako; and David Renwick, its chief risk officer. All three are shareholders in the business, which has offices in Dublin and Cork.
The company provides lending for commercial and residential properties, typically in the range of €1 million-€20 million, over five years and commits to offering fast credit decisions and efficient processing of applications.
The company will provide loans up to 75 per cent of the value of a property. Its largest deal has been valued at €26 million on an industrial site in Dublin. Some 43 per cent of the value of its loans has supported deals in Dublin, with the balance spread around the State.
