Initiative Ireland To Finance 17,500 New Homes

12 Sep 2021 | 11.18 am

Initiative Ireland To Finance 17,500 New Homes

Fairfield, Goldman Sachs and CUDA come up with €1.5 billion

12 Sep 2021 | 11.18 am

Initiative Ireland has secured funding totalling €1.5 billion that will allow it to finance the construction of 17,500 homes across the country.

A tranche of €900m funding capacity comes from backers Fairfield Real Estate Finance and the Private Credit Business of Goldman Sachs Asset Management, and will finance construction of 7,500 homes in the next three years.

In addition, a further €600m will go in loans to Approved Housing Bodies to support their delivery of 10,000 new homes over 10 years. The cash comes as a result of Initiative Ireland’s partnership with CUDA, the Credit Union Development Association, via a new regulated fund approved by the Central Bank earlier this month.

The joint venture with the Fairfield/Goldman Sachs financiers will mean Initiative Ireland will lend to small, medium and large-scale developers to finance the development of private, social and affordable housing schemes, while supporting more than 3,000 construction jobs and creating 20 new finance posts at the organisation.

Chief executive Padraig W Rushe said: “We’re delighted to have won the backing of the Private Credit Business within Goldman Sachs Asset Management for the joint venture with Fairfield Real Estate Finance, further strengthening our ability to compete as a new financial competitor in the Irish property market.

“We’re building a truly sustainable and reliable source of alternative funding for experienced property developers, to help tackle the housing crisis.”

Fairfield boss Chris Wilson added: “We welcome the Private Credit Business within Goldman Sachs Asset Management backing for our joint venture, which enables us to lend at more competitive rates through Initiative Ireland. Like Fairfield, they recognise Initiative Ireland is uniquely positioned to become a leading provider of residential development finance in Ireland, with a proven track record and innovative models that support large and small developers alike.”

The regulated fund in partnership with CUDA received final approval from the Central Bank this month and is now open for subscription to credit unions, with the goal of originating €600m of loans over the next three years, going to Approved Housing Bodies to build 10,000 homes within ten years.

Competitive Finance

CUDA chief executive Kevin Johnson commented: “The fund will provide competitive finance to Approved Housing Bodies which play a key role in the delivery of social housing today. As not-for-profit enterprises, they purchase and commission new social housing for long-term lease-back to local county councils.

“This activity is vital in promoting and enabling the construction of social housing nationwide. We hope to offer an ongoing sustainable and affordable source of funding for housing bodies and, in turn, credit unions will have the opportunity to deploy their members’ savings in a conservative, sustainably managed strategy.”

Since its launch five years ago, Initiative Ireland has built an investor community which has financed more than €50m in housing loans up to May 2021. Since announcing the joint venture with Fairfield that month, the company has already provided initial approval for €50m in applications.

Combined with the target for the regulated fund, it aims to lend €1.5 billion over the period, and become a leading provider for sustainable development finance across Ireland.   

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