Monday October 26, 2020

'I hope by 2027 will have a stable, sensibly-funded, well-invested Irish real estate market'

With a resurgence in development over the past three years, construction cost inflation is a real concern, warns Michael McElligott

30th May, 2017
Chief Executive of Tetrarch Capital, Michael McElligott

What's your name?

Michael McElligott

What’s your company and describe your role?

I’m the chief executive of Tetrarch Capital. Tetrarch is an Irish owned company based in Dublin and is one of the largest investors and most active developers in the real estate market here.

We have over €600m in AUM split into three sectors of the real estate investment market - commercial/office, hospitality and residential. We also have a significant stock of development sites and land.

By value, over 85 per cent of our investments are in the greater Dublin area with over 50 per cent of these being in the hospitality space and the balance in the commercial and residential sectors.

As the chief executive, I am responsible for determining the optimal strategies within the different arms of the business, securing wide stakeholder support for the various strategies we set, ensuring we have the necessary internal and external resources to enable us to execute these strategies and for the overall performance of the group and our underlying investments, many of which are trading businesses.

How long have you held the position?

I’ve been the chief executive of Tetrarch since the end of 2014.

What are your day-to-day responsibilities?

Given the diversity of our investments and developments, my day-to-day responsibilities are numerous and varied. I focus on sourcing potential new deals, participate in the formulation of the investment thesis and business plan for all target assets, oversee completion of acquisitions, assist in setting the development strategy for all lands and sites, assist in identifying the best sources of capital across our portfolio, assist in the asset management effort where I can and work to deliver liquidity for our shareholders once we have maximised the value of assets under our ownership/management.

I’m there to assist the heads of Tetrarch’s investment, asset management and development, capital markets, finance and hospitality operations teams as required, generally on matters of a strategic nature. My colleagues are all very seasoned and incredibly capable individuals - I’m there for a second opinion or further assurance if needed.

What is your professional background?

I’m a solicitor and attorney at law by qualification. I practised law until 2002, spent a few years in corporate finance after this and then moved into real estate investment and development.

Tell me about yourself away from work?

As a Kildare native with Kerry roots, I’m an avid sports fan. I’m a passionate follower of horseracing, rugby, soccer and gaelic football in particular. I live in a house with four very beautiful ladies. I tend to work long hours for peace of mind!

Tell us something very few people know about you?

I had the ambition but not quite the ability to become an architect and spent a couple of unsuccessful years studying for a degree in architecture in Bolton Street from 1990-1992. This was enough to equip me with the bluffer’s guide to design and development, which hasn’t failed me yet.

What challenges do you see for the real estate sector?

With a resurgence in development activity in the past three years, construction cost inflation is becoming a real concern. Within the contracting and sub-contracting markets and across the design team/professional services sectors, the demand for the most experienced and skilled resources is increasing rapidly and wage inflation is very apparent.

Financing remains a significant obstacle for development projects. We have a number of development projects in the pipeline; all are compelling and non-speculative in nature. As we move through the development cycle we would hope to see a greater volume of debt capital being made available at more competitive pricing for the types of sensible projects we favour.

Whilst we welcome the entry into the Irish market over the last 24 months of several new international sources of debt capital, often with excellent local sponsorship/partnership, we would hope to see others emerge.

Where do you see the industry in ten years’ time?

I’m not sure where we will be in ten years as it’s very difficult to predict long term macroeconomic trends and their impact on a relatively small market like Ireland. I would hope that 2027 will see a stable, sensibly-funded, well-invested Irish real estate market with strong local investor participation and continuing liquidity from international capital sources, both debt and equity, professional investment and asset management and general stability in the market.

As an asset class, real estate will always be cyclical. If I were to continue to manage our business through this period I would encourage continued low leverage, maintain a long term perspective, ensure ongoing investment in our staff and management, which are key assets of our business, and keep a close eye on the impact of technological change on our sector and, in particular, on our own investments.

Michael McElligott, chief executive of Tetrarch Capital, is appearing at the Sunday Business Post Commercial Property Summit on June 15 at the AVIVA Stadium. For more information on this event, please see www.commercialpropertysummit.ie

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