A key role in the housing crisis has been played by overseas entities buying up property to place on the rental market – or purchasing existing mortgages which, in some cases, have then seen the interest rate double from that originally agreed between the householder and the previous lender.
The latter such entities have been christened Vulture Funds and were partly the subject of a Sinn Féin private members’ motion on housing in the Dáil this week. Among the party’s proposals were that the state “ban investment funds from bulk purchasing homes”.
Housing minister Darragh O’Brien argued that the changes to planning regulations introduced in 2021 have greatly reduced bulk purchases. He also remarked, apropos a reference by Sinn Féin TD Chris Andrews to noise at the Irish Glass Bottle site in Ringsend, to the fact that “The Deputy’s party leader knows the developer.”
This was a less than oblique nod towards the favourable remarks made by the developer Johnny Ronan about Sinn Féin’s “pragmatic” housing policy. Mary Lou McDonald also referred to a meeting with Ronan in an interview before Christmas. The Ronan Group partnered with the US property giant Oaktree Capital to buy 80% of the IGB site in 2020.
Oaktree is actually owned by the vast Brookfield Corporation, who we previously mentioned in relation to the ownership of the proposed asylum accommodation site in Ballsbridge through its ownership of Goldstein Properties and as a backer of the Quanta Capital group, both of which are connected to Joe Christle and Mel Sutcliffe.
Sinn Féin’s own record regarding large scale property developers when the biggest party on Dublin city Council, and the main component of a left majority between 2014 and 2019, does not inspire confidence in their ability to address the issue of vulture funds and build to rents.
The involvement of such funds in the Irish mortgage sector has been highlighted in a number of court cases.
Several of these have involved Pepper Finance, who are currently the subject of a court action involving a Cork couple who claim that Pepper unilaterally increased their mortgage rate from 4.3% to 8.5% after Pepper bought thousands of mortgages from Permanent TSB in 2018.
Darren Hennessy and Emer Barrett, of Togher, claim that the interest rate increase means their loan repayments went up by €7,400 a year – describing the rate as “unconscionable and unenforceable”, and claiming that Pepper’s rate hike was “out of proportion” to any legitimate interest under the loan contracts.
That case has yet to be decided. Pepper were also referred to at an Oireachtas Committee meeting on January 17 by David Hall of the Irish Mortgage Holders association who actually named them as one of those most amenable to negotiating deals, although the Committee Chair Barry Cowen suggested that companies ought not be named in the context of “vulture funds.”
Other TDs like Fine Gael’s Bernard Durkan have described Pepper Advantage Ireland and Start Mortgages as having instigated a “reign of terror” against borrowers.
80,000 MORTGAGES – 10% OF REPOSSESSIONS
John McGuinness of Fianna Fáil claimed last September that Pepper has 80,000 mortgages in the state, and – at another Committee meeting in March 2023 – Dermot Sreenan of MABS said that Pepper had been responsible for 10% of the 9,763 repossession orders sought in 2022.
So who are Pepper? They were founded in Australia in 2000 and operated for several years by Merrill Lynch, which starred in the American sub-prime mortgage crisis, before being bought by another US giant Kohlberg Kravis Roberts in 2017.
KKR are involved in a vast range of sectors around the world. One of the founders, the late Jerome Kohlberg Junior, established the Kohlberg Foundation which has funded the leftist William J. Brennan Center for Justice which has supported Black Lives Matter, and the Alliance for Justice which campaigns against the appointment of pro life and conservative judges. The Foundation has also supported the Southern Poverty Law Centre and Planned Parenthood.
Lest you think all of these vulturery-type billionaires are Woke leftists, another of KKR’s founders Harry Kravis contributed to the Trump inauguration festivities in January 2017. He was apparently the key mover in the 1988 leveraged buyout of Nabisco which was the subject of the book and movie Barbarians at the Gate.
While the vulture funds are almost invariably part of overseas companies who between them control enormous assets, they could not operate here without either the facilitation of the state, nor indeed the management of their operations by companies registered in Ireland and which have Irish citizens on their boards of directors.
Pepper Finance Corporation (Ireland) trades as Pepper Money and Pepper Asset Servicing. The two directors of Pepper Finance are Michael Culhane and Andrew Smith who are part of the original Australian group that was founded by Culhane in 2000.
Pepper Finance Corporation had an operating profit of more than €23 million for 2021 and 2022.
The company secretary is Neasan Cavanagh who previously worked with Arthur Cox solicitors. He has also been a director of property and letting companies IRPF Glencairn, IRPF Hibernia and Hibernia REIT which was bought by the same Canadian property giant Brookfield which owns Oaktree.
Hilary Ray is secretary of FFH Management the Fairfax International Corporation, a company listed on the Toronto stock exchange and involved globally in the property market. Fraser Gemmel is based in London and is CEO of Pepper European Servicing.
Michael Gibbons is from Newcastle, County Down and was formerly a director of the Ashtown Management Company and the Gateway Estate Management Company.
Ganna Agafonova is based in the UK and is CEO of SWIFT Germany and a director of S.W.I.F.T Ireland, a financial messaging service. Ian Wigglesworth is the managing director of Pepper Finance Corporation and was previously with Bank of Ireland, Bank of Scotland and SEI Investments.
Cormac Ryan was previously a director with Lunar Commercial Mortgages which is wholly owned by Lunar Funding who bought out Pepper’s shareholding.
So while the main movers in the increasing role of “vulture funds” in the Irish property and mortgage sector are the overseas giants, they are an intimate part of the domestic business sector. That can be seen even by our cursory look at the links that exist between Irish owned companies and Irish based directors and the overseas giants.
That perhaps warrants further research, as does the manner in which all of this has transformed and will continue to transform the Irish economy.