ISIF invests €140 million in Irish Life’s Residential Property Fund to create new homes for the private rental market

The Ireland Strategic Investment Fund (ISIF) has committed €140 million to fund the delivery of new homes for people in the private rental market.

The money will be deployed in the Irish Residential Property Fund, a newly-established Private Rental Sector (PRS) fund, managed by Irish Life Investment Managers (ILIM).

The PRS fund will enable the supply of new residential stock to increase through forward funding, forward purchase and development financing arrangements, and aims to provide the Irish marketplace with high-quality, professionally-managed residential rental assets. ISIF will co-invest alongside private sector investors in this fund.

Institutional investment in the residential to rent sector is a new feature of the market in Ireland but is well established in developed economies around the globe. Institutional ownership of residential property schemes gives renters stability of tenure, with a motivated long-term owner whose objective is to continue to hold and make the accommodation available for rent into the future. These residential schemes are professionally managed, with the owner responsible for the cost of repairs and maintenance and the provision of tenant amenities and services.

Increased investment in housing a key strategic priority for ISIF

• The investment in ILIM’s PRS fund underlines ISIF’s commitment to housing, one of the five key priorities contained in ISIF’s new investment strategy, announced in February.

• With this investment ISIF has committed a total of €916m to residential housing investments to date, unlocking €2.4bn in total housing commitments when private sector co-investments are included.

• ISIF’s platforms have already completed over 2,000 units up to December 2018.

• The investment announced today is consistent with the Government’s Rebuilding Ireland strategy and ISIF and the wider National Treasury Management Agency’s (NTMA) consideration of initiatives that are capable of increasing the supply of homes for people who rent, as well as for people who wish to buy.

Kieran Bristow, Senior Investment Director, ISIF said:

“We expect this fund will be effective in helping to alleviate the shortage of supply of homes in the private rental market. This is a good example of ISIF’s commitment to housing in its new investment strategy and has the potential to deliver significant quantities of much-needed new homes for people who rent.”

Irish Life Investment Managers focused on long-term investment in property

Irish Life Investment Managers (ILIM) is a long-term investor in property, on behalf of its client property funds, with €3.5 billion invested in the sector. ILIM launched the Irish Residential Property Fund in 2018 as an open-ended institutional fund to invest in the construction and long-term hold of residential properties for rent.

Patrick Burke, Managing Director of Irish Life Investment Managers said:

“The ISIF investment in ILIM’s Irish Residential Property Fund will act as a catalyst to the creation of additional residential properties, encouraging the commitment of additional long-term capital to the residential sector. This will further increase the supply of new stock in the market and provide the industry with the funds and confidence to accelerate new residential schemes, which otherwise would not get built or would take an extended period of time to deliver.”

ILIM’s long-term investments in property will play a positive role in contributing to the increase in supply of new residential stock in the Irish market. Ireland has a shortage of apartments relative to other European countries, as well as an absolute shortage when assessed against the number of one-and two-person households. ‘Just 12 per cent of the dwellings in Ireland are apartments, approximately one quarter of the EU average. If Ireland was in line with the EU average, there would be approximately 800,000 apartments in the country, 600,000 more than at present.’ (Institutional Investment in the Housing Market, Prepared by the Economics Division, Department of Finance, February 2019)

ILIM will continue to invest in residential stock to meet the needs of changing household sizes and the demand for housing close to the main employment centres. The fund will be permitted to invest in existing stock, but ISIF capital will be ring-fenced in a sub-fund and can only be drawn for acquisitions delivering new housing stock to the market.

Ireland Strategic Investment Fund