Brendan Investments update

Brendan Burgess

Brendan Burgess

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Colm Keena has reported on the accounts of Brendan Investments up to the end of January 2011 in today's [broken link removed] Note these accounts are a year old. I did an assessment of the product at its launch in September 2007

This is my summary from the figures in The Irish Times Report

Initial investment - Sept 2007|€13m
Value attributable to shareholders at end January 2011|€9m
loss in value|31%
Total value of property|€26.49m
Less loans|€18.59m
net value|€7.9m
They probably have cash to bring up the value to €9m .

loss year ended Jan 2010|€ 262,000
Loss year ended Jan 2011|€ 3.3m
This loss seems to be due mainly to the collapse of a tenant, which resulted in the building requiring €2.5m to be spent on refurbishment.
The company has now fully committed its capital on German commercial property, with an investment in a Frankfurt Airport project being made during the financial year.
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According to the prospectus
“75% will be invested in commercial property in Germany and the UK
25% will be invested in development projects in Portugual, the UK and Ireland”

I don't anything about continental property, but as the fund raised only €13m, it was probably a good idea to focus on just one country. And Germany may be more attractive than the UK, Portugal or Ireland. If it had raised its target of €250m, it would have been able to diversify a bit better.

The directors received payments of €42,600 from the company for what were described as "other services".


During the year the company was invoiced by Brendan Investments Property Management Ltd for services valued at €360,000, including directors’ salaries of €107,000.


The four directors of both companies, Mr Eddie Hobbs, Vincent Regan, Hugh O’Neill and Dermot Flanagan, are the owners of BIPM Ltd.
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If the fund returns in excess of 8% per annum, the promoters will earn a bonus of 20% of the return in excess of 8% per annum. They are a bit away from this.
 
Indo: Hobbs rakes in fees as investors are hit by losses.

[broken link removed]

Eddie said on Marian that the article is just plain wrong. The Indo journo (Donal O'Donovan) did not bother to respond to requests to talk on Marian.

What are the issues raised by the article and who is correct?

Update - The article seems to have been removed from the Indo website.
 
Some points

Note 14
It is currently envisaged that the investment exit date will be the initial exit date which is the tenth anniversary of the commencement date. However, the shareholders ( I think that these are the 4 directors and not the guys who invested through loan notes) may extend the period by up to 5 years.


The ARD was 11/9/2011 and the return was not filed until 8th February 2012. 121 days late, so they paid €463 in penalties for late filing.
 
Eddie was on the Marian Finucane show to say that the Indo was just factually wrong. He said that the 4 directors got nothing from the company and, in fact, the four directors paid €800k of set-up fees from their own pocket and they were under no obligation to do so.


I don't know where the Promoters' fee is

Note 19 Related party transactions
The total value of services invoiced to the group by BIPM during the year was €360,000 inclusive of directors' salaries of €107,000 (paid by BIPM) on behalf of the group. The directors of BIPM are the same as the directors of Brendan Investments Pan European Property Plc.
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The directors received payments of €42,600 from the company for what were described as "other services".

The promoters charge 1% of asset value. That would be 1% of €26m or €260,000.

Eddie Hobbs said that the Directors got nothing at all from the company. He said that the €360,000 was for managing €36m worth of assets. I don't know where the €36m comes from.


|31 Jan 2011|31 Jan 2012
Rental expenses|331,584|217,008
Admin costs |623,467|443,317
Presumably the €360k is in the Admin costs figure?
 
I have read the accounts of BIPM Ltd, the company which charges the PLC a management fee. As it's a small company, they don't have to publish a P&L, just a balance sheet. But one can see from the balance sheet the accumulated losses.

year ended |accumulated losses|profit must have been
August 2008|827,801|(827,801)
August 2009|503,533|324,268
August 2010|122,143|381,390
This is what I think happened:

The directors lent BIPM money.

BIPM paid €800k in set up fees which it had no obligation to do.

Brendan PLC paid BIPM the 1% fee.

BIPM has used this to partially repay the investors.

So it would be correct to say that they have not got gained personally from it yet.
 
Eddie is suing the Indo

[broken link removed]

Eddie Hobbs - Friday, March 02, 2012
Last Saturday the Irish Independent ran a front page story. Tellingly, that story was taken down from its website by lunchtime and no longer exists on line. Earlier, the Irish Independent failed to show up on The Marian Finucane Show to defend its lead story despite requests from the programme producers to do so. The serious allegations made by the Irish Independent are patently untrue and, unhappily, it's response to my request for a front page retraction has been unsatisfactory. Under the circumstances I have instructed my lawyers to issue proceedings on my behalf against the Irish Independent. I will not be making any further comment.
- Eddie Hobbs
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Hmmm, a geared property investment with an entry level of just €5,000 has now gone and invested heavily in one of America's poorest cities; a place where you could buy a house for $1,000 after the crash there. Have they become slum landlords?

I doubt this is what people signed up to when they sent in their life savings. :rolleyes:


Steven
http://www.bluewaterfp.ie
 
SBarrett said:
Hmmm, a geared property investment with an entry level of just €5,000 has now gone and invested heavily in one of America's poorest cities; a place where you could buy a house for $1,000 after the crash there. Have they become slum landlords?

I doubt this is what people signed up to when they sent in their life savings. :rolleyes:


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
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Indeed. Would like to hear more about these deals made by a consumer champion.
 
Brendan Burgess said:
The investment seems to be getting back on track,......
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I'd hazard a guess that the majority of property funds launched around the same time as this one were totally derailed.

Do investors actually care where the money is invested as long as it makes them money?
 
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