Portfolio troubles diminish Johnny Ronan’s empire

Are we witnessing the decline of the Ronan empire? Johnny Ronan bestrode Dublin property for over 30 years, building city landmarks and garnering a reputation as a reveller and long-distance cyclist.
Ronan Group Real Estate is currently involved in two of the city’s biggest development projects, at the former glass bottle factory in Ringsend and North Wall Quay, the last hurrahs of Dublin’s docklands regeneration. He has fingers in other pies, not least the redevelopment of Tara Street railway station, the last stage of Spencer Dock and a housing development at Cherrywood in south Dublin. All three are the subject of typically Ronanesque wrangles with the authority.
Business as usual then, except for the inability of the rock star developer to refinance a portfolio of investment property in receivership. The Business Post reported that Ronan was in pole position to acquire five of the 11 assets up for sale. These are three properties on Grafton Street, including Bewley’s Café, and interest in two office buildings, St James House and Percy Place, joint ventures with Davy investors.
Bewley’s is a trophy asset. Like all trophies, it’s nice to look at and puffs up the ego but it’s not of tremendous use. It is now a heritage site, protected outside and in. Its national treasure tenant is clamouring for a cut in rent. What James Joyce described as the “lofty, clattery café” is now as well-known for litigation as sticky buns. It’s a messy investment.
The other Grafton Street properties include a Lush store across from Trinity College, with an apartment on top, and City Break apartments over a Permanent TSB branch close to St Stephen’s Green. The Lush shop is unlikely to have attracted strong interest, and may have been on the bargain rail. One expects Ronan will have to bid up for the bank branch. He will also have to pay up for Percy Place and St James House. Yet the appetite for offices is weak, co-owned offices even weaker still.
All the properties are under offer, no deals have closed. There will be lots of interest in the identity of Ronan’s backers. There has been speculation that PTSB, hungry to build its business book, might finance the Grafton Street site.
Connaught House, the jewel of the portfolio, is the one that got away. This is believed to be under offer at €63 million, or 20 per cent below its guide. It will yield close to 11 per cent, which is an absolute bargain. That has got to hurt.
It is incredible how the world has changed for developers like Ronan. Back in the boom, he would simply have used his stakes in the development properties to refinance those investment properties, just as he would have used the investment properties as collateral to invest in the development projects. This happens in a rising market.
When values fall, it is a very different picture. Even the Citigroup site on North Wall Quay — easily the most valuable part of Ronan’s empire — might struggle to offer much collateral in this market.
Ronan, 70, is battling for a legacy. He has three children in the business. He was never going to go without a fight.
It’s an old adage in corporate finance: tying two stones together will not make them float. Last week, it emerged LetsGetChecked (LGC), a home testing company headed by Irishman Peter Foley, is to buy Truepill, an online pharmacy, for $525 million.
The cash upfront element is $25 million, with a reported $200 million in earn-outs. LGC is issuing a $150 million loan note to fund the deal, and pump cash into the merged businesses. Matchmaker Optum, a life sciences investor, part of UnitedHealth Group, is a shareholder in both.
Axios, which broke the story, says Truepill lost $15 million on $64 million of revenue for the first four months of 2024. LCG lost $32 million on $39 million in sales in the first five months.
That is way down on the revenues of $193 million that LGC posted in 2022. Then the pandemic meant everybody was home testing. Clearly, this is no longer the case. Still, there are believers. Last December, LGC issued $23 million of preferred stock at over $49 a share. That points to a valuation of $1.4 billion on revenues of $90 million. Bonkers.
Online pharmacies and home testing formed a part of a narrative of how the pandemic would change medicine. Breaking norms in a heavily regulated industry is tough. Truepill has suffered data breaches and probes into its dispensing of controlled substances. Will it and LGC make it to the brave new dawn? We shall see.
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