Wall Street Is Europe’s Landlord. And Tenants Are Fighting Back.

Her worst fear, Mrs. Tobun said, was that her family might wind up among the growing ranks of the homeless.

Ireland is now enjoying a robust recovery. But growth has been fueled partly by financial maneuvering, and the real underlying gains are far from even. More than 5,000 people have been left homeless by the crisis, with the government subsidizing many in shelters.

Mrs. Tobun does not have many options. She does not want to move farther out, since it would mean changing schools for her son who has special needs. A nearby rental is too expensive. Rents in Ireland have risen around 20 percent since the crisis as home construction dried up after the bust.

Still, the eviction effort showed that her home and the others in Tyrrelstown were worth much more as empty sales properties than as long-term rentals. In a statement, the Larkin family denied that Goldman’s subsidiary exerted pressure to end the leases or sell. The statement said a Larkin-owned company wanted to exit the residential rental business, given regulatory changes and improving market conditions.

For Tyrrelstown residents, the eviction battles have been an all-consuming ordeal. After receiving a notice in May, Gillian Murphy and her partner, Damien Moore, refused to move from the home they had rented for six years. One of their three children has autism, and switching schools would put him at the bottom of the list for programs elsewhere.

Soon after the family received their eviction notice, two men working for the Larkin-owned entity arrived at their home and began taking pictures. “Everyone is petrified of these people because we don’t know who they are or what the purpose is,” Ms. Murphy said.

A Winning Hand

Before last year, few people in Ireland had heard of Cerberus Capital. Like other Wall Street players, Cerberus came into the country quietly, creating a local subsidiary under a different name and setting up a complex and extensive web of interconnected businesses.

There are the 13 subsidiaries in Dublin, all with Promontoria in their names. They have no employees and no offices. They are all registered to the same address on Grant’s Row, a letterbox near Parliament. Those subsidiaries, in turn, are subsidiaries of holding companies in the Netherlands, more than 110 of which had the Promontoria name.

The structure has helped Cerberus profit in Ireland. Through the subsidiaries, Cerberus bought around €17 billion worth of loans on properties in Ireland and Britain in two years, for just under €6 billion euros. In Ireland alone, Cerberus has been earning hundreds of millions of euros in interest and other income.

The setup, promoted by the Irish government along with other tax strategies, allows for a bit of tax magic that can make those profits seem to disappear.


Ada Colau was elected mayor of Barcelona after she led an anti-eviction movement.

Samuel Aranda for The New York Times

To buy the debt, Cerberus’s Dutch Promontoria companies lent Cerberus’s Irish Promontoria firms money at a high interest rate. The Irish businesses ended up paying roughly the same amount in interest that was earned on the real estate investments. Since the interest was deductible, Cerberus cut its tax bill drastically.

One Irish subsidiary, Promontoria Eagle, which bought distressed loans in Northern Ireland and Britain, earned interest income in 2014 of 111 million British pounds on the deal, or around $140 million. After deducting interest charges and management and audit fees, taxable profit was only £7,788. The resulting tax charge in Ireland: just £1,947.

Corporate filings for five other Irish subsidiaries of Cerberus, provided by DueDil, a corporate intelligence firm, show the same pattern: taxable profit and tax charges reduced to nearly identical numbers. Portfolios with up to £1 billion worth of loans wound up with tax charges of less than £2,000.

Other Wall Street firms employed a similar method. Beltany, the Goldman subsidiary, earned interest income of €44 million on debt portfolios in Ireland at the end of 2014. After lowering taxable profit to €1,000, it netted a tax charge of €250, filings show.

Lone Star collected interest income of more than $970 million at the end of 2014. Its taxable profit was just over $11 million, resulting in a tax charge of less than $1 million.

“Wall Street firms have made a lot of profit from other people’s misfortunes, and on top of that they’ve systematically structured things so they pay almost no tax,” said James Stewart, a finance professor at Trinity College, Dublin. “So what’s their contribution to society?”

Cerberus and Lone Star declined to comment. Goldman said that Beltany followed Irish law and that the interest it collected was subject to United States tax.

Fighting Back

On a warm summer day, 20 people crowded into a basement in central Dublin. The dimly lit room had recently been converted into makeshift headquarters for the Hub, a grass-roots operation that enlisted volunteer accountants and lawyers to help people who were facing eviction.

David Walsh, a former firefighter living in Ballybunion, on the west coast of Ireland, drove six hours to attend the meeting. Two years ago, Lone Star’s Irish affiliate had scooped up the mortgage on his family’s award-winning bed-and-breakfast, the Ballybunion B&B, for a fraction of the original cost. He was angered that he had not been allowed to buy back his loan at the cheap price the fund received.

Soon after, he said, the affiliate mounted an effort to increase his mortgage payments. In the crisis, his bookings had slumped badly, and his original bank had agreed to lower his monthly payments to €800 from €2,000.


Jamila Berrabeh, with her son Adam, learned that eviction from the house outside Madrid where she has lived for nine months had been suspended.

Andrea Comas/Reuters

“They phoned me every day of the week and at night saying we have to increase the payments,” Mr. Walsh said of the Lone Star affiliate.

When the Hub’s lawyers questioned the legality of Lone Star’s ownership of his mortgage, Mr. Walsh diverted his loan payments into an escrow fund as a form of protest until the issue could be resolved. “The amount of harm being done to vulnerable people is immense,” he said.

Mr. Walsh was threatened with foreclosure, which he continues to fight.

A broader rebellion has barreled ahead in Spain, where Blackstone, Goldman and other American firms bought residential properties, including subsidized rentals.

While low-income rentals represent a small piece of their portfolios, the companies ignited a firestorm when they began evicting squatters, in an effort to improve property values. The activist group P.A.H. organized protests around Spain and outside Blackstone’s New York headquarters.

Blackstone and Goldman said they had evicted just a small number of squatters and aimed to keep renters in the properties long-term. Goldman said its policy was to help certain distressed tenants avoid eviction.

The perceived invasion has prompted a political reassessment. Some Spanish regional authorities have passed laws intended to clamp down on Wall Street’s involvement. Catalonia now requires firms to offer cheap alternative housing to tenants. The local authorities can also buy back homes or expropriate them if they are left empty for three years.

So popular was the anti-eviction movement that Ada Colau, its main leader, was elected mayor of Barcelona last year. “The opacity and distance of a fund that is based much farther away makes it a lot harder to hold it responsible,” she said.

In Ireland, the Tyrrelstown episode has become a rallying cry.

Housing advocates and lawmakers across the political spectrum are urging stricter oversight. Along with new legislation intended to close tax loopholes and restrict mass evictions, lawmakers are considering requiring banks and financial firms to follow a code of conduct and provide alternatives for troubled homeowners.

But for Mrs. Tobun and other Tyrrelstown residents, such changes may offer little relief.

Recently, she and her neighbors received word that their rents would rise sharply in the new year, after their current contracts expire. She said she and most of the 40 tenants affected would be unable to pay.

The new rents will be closer to current market prices, but many residents suspect that the increase is a tactic being used to flush them out so the properties can be sold. In response, the Tyrrelstown community is planning another series of demonstrations.

“This is a fight between David and Goliath,” Mrs. Tobun said. “They want us out by force. All we can do is protest.”

“We believe in miracles,” she added, “but I don’t know how we’re going to win.”

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