Irish Homebuilding Equity Fund to help build 2,500 new homes

Irish Homebuilding Equity Fund to address anomaly of equity finance being a constraint for housebuilders.

A new €55m equity fund has been created by the Irish Homebuilding Equity Fund (IHEF)with the backing of Bank of Ireland, the Ireland Strategic Investment Fund (ISIF) and Pearl Property Managers.

The new fund aims to support the delivery of more than 2,500 new homes in Ireland over the coming years.

“We know a lack of equity finance is holding many developers back and the Irish Housebuilding Equity Fund can unlock this, providing growth capital for the nation’s up and coming housebuilders”

IHEF will provide housebuilders with equity investment to unlock finance for sites with planning permission and sites zoned for residential use. It will support projects of 50-500 homes in urban areas across the country.

Equity shortage in Irish housebuilding market

Housebuilders need both debt and equity finance for new developments.

However, with limited international equity providers currently active in the Irish market, access to equity remains a challenge for many developers, increasing their reliance on their own relatively small equity base to secure land and bring it through the planning system. These constraints can also hamper their ability to scale up and activate more than one site at a time.

“Ireland has an urgent need for more housing,” said John Feeney, head of Property, Project & Asset-backed Finance at Bank of Ireland.

“At Bank of Ireland we are working hard to address this. We are currently funding the development of around 21,000 homes and we intend to put more of our capital to work. We know a lack of equity finance is holding many developers back and the Irish Housebuilding Equity Fund can unlock this, providing growth capital for the nation’s up and coming housebuilders.”

IHEF will partner with developers who have a strong track record in housebuilding and residential development. Developers must be capable of accessing debt funding and will be expected to co-invest as part of the overall equity requirement. 

“Housing and enabling infrastructure is one of ISIF’s key impact themes,” said Nick Ashmore, director of the Ireland Strategic Investment Fund.

“We have already committed over €1.3bn to homebuilding projects, which has supported the delivery of over 14,200 new homes to date and is anticipated to deliver over 25,000 homes by 2030. This latest investment demonstrates our continued appetite and ability to provide debt and equity capital across the risk spectrum to support the development of new homes.

“ISIF’s investment in the Irish Homebuilding Equity Fund, forms part of ISIF’s €400m Equity for Homebuilding Programme announced in July 2023, helping to alleviate the supply shortage and providing Irish homebuilders with an additional source of capital to help make their projects a reality.”

The IHEF will be managed by Pearl which is co-investing in the Fund. Pearl has a strong record in providing house builders with equity capital to facilitate the acquisition of sites, enable infrastructure and complete the development of residential housing on sites that are constrained by a lack of available finance.

Its first fund, the Pearl Residential Equity Fund, was established in 2019, to provide equity financing of this nature to developers. To date, Pearl has funded the completion of almost 800 houses and apartments with a further 1,500 in planning and construction over nine active sites in Dublin, Wicklow, Galway, Kilkenny, Laois and Louth.

“We know this partnership financing model works, having seen strong demand for the Pearl equity solution from larger housebuilders and developers,” explained Ken McCullagh, CEO of Pearl.

“We are pleased to be active investors in IHEF and to be bringing our expertise to the Fund, helping to expand Ireland’s much needed housing supply.”

Main image at top: Rebekah Brady, Deputy Director, Head of Investment, ISIF; Ken McCullagh, CEO, Pearl; Aishling Donnellan, Associate Director, Property Finance, Bank of Ireland

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