Ireland’s sovereign development fund is investing €50m in a debt strategy for Irish office developments.
The Ireland Strategic Investment Fund (ISIF) and institutional clients of US-based Quadrant Real Estate Advisors have committed up to €100m to the strategy.
Seeded from the remnants of Ireland’s National Pensions Reserve Fund, ISIF is targeting real estate, renewables and the agricultural sector as it aims to deploy up to €6bn domestically by 2020.
Quadrant will manage the provision of senior stretch loans for grade A office projects.
The €7.5bn fund, controlled and managed by the National Treasury Management Agency (NTMA), said it was backing the fund to help accelerate the delivery of prime office space, which it hopes will improve Ireland’s appeal abroad and boost foreign direct investment (FDI).
ISIF director Eugene O’Callaghan cited a lack of comprehensive development finance packages for high-quality office development and construction opportunities.
“This investment mandate will help deliver commercial premises that meet the growing requirements of the market,” he said.
In July this year, ISIF joined KKR Capital to launch a €500m residential property joint venture.
The fund contributed €325m toward the venture, with KKR providing the remaining €175m.
Quadrant, which manages around $6bn (€5.6bn) of commercial real estate assets, said it was in talks with Irish developers for projects including hotels and residential developments in Dublin and other locations, which will be financed from Quadrant’s wider client base.
The company’s chief executive, Kurt Wright, said finance for Irish office development projects was in short supply, with banks restricting finance to low-risk projects with letting or sale agreements in place.
“We will work with developers in the early stages of projects where the risks are higher but where the rewards are greater,” Wright said.