In recent months Initiative Ireland has emerged as a new leading property finance provider, with plans and capacity to lend €1.5bn to property developers and approved housing bodies over the next three-years. For years the values-based lender had operated on the fringes, backed by their impact investor community, helping to deliver smaller residential developments through their ethical finance model. With a zero-loss and zero-enforcement record, and competitive pricing, they managed to build significant demand from developers which far exceeded their capacity to lend.
Padraig W. Rushe, CEO of Initiative Ireland explains, “We’ve always been upfront with developers, trying to manage down expectations. We knew we would have to start small and build our track-record before we could secure a larger credit line. That’s all changed now.”
The change came about this year, with the announcement that the company had secured exclusive funding lines from Fairfield Real Estate Finance, with capacity to lend €900m to Irish Residential Developers over the next three-years. The announcement coincided with a new partnership with the Credit Union Development Association, which will see Initiative Ireland lend to Approved Housing Bodies on behalf of a new fund, backed by Irish Credit Unions. Combined, the partnerships position Initiative Ireland to lend over €1.5bn with capacity to drive a 16% increase in housing supply nationwide.
Today, Initiative Ireland finds itself in the enviable position of having significant additional lending capacity. This not only sets them apart in the market but comes with a new set of challenges, which Rushe is looking to address head on.
“While Initiative Ireland has been working with developers since 2015, in many ways we’re brand new to the market. Whereas previously we only had capacity to fund a handful of smaller, shorter loans, due to the nature of our funding, today we find ourselves issuing terms on loans from as little as €1m up to €80 or €90m. We’re engaging directly with borrowers and through agents.
“We’ve absolutely maintained our focus on backing quality residential lending. We are focussed on backing private housing at realisable prices, in addition to social and affordable housing. If the quality is there, we are happy to look nationwide, lending up to 80% of the capital needed at rates from 7% – 8%. Above all else though, we aim to be fast and offer unrivalled flexibility. We work with borrowers to help structure the loan to help them make the most of each project.”
As a values-based company, Initiative Ireland also stands out. They are a signatory of the UN Principles of Responsible Investing and measure and report on the social and environmental impact they deliver. This is something Initiative Ireland considers to be a huge positive for their borrowers.
Declan O’Brien, CIO explains: “Our goal overtime is to work with our funders as a sustainable source of finance. It’s in our DNA, as a values-based firm, to work with developers through the challenges they face. We’re there to help developers to succeed in delivering new housing projects, to tackle the housing crisis. That’s a mission we share with our funding partners and it isn’t lost on our borrowers either.”
While these new institutional funding lines will enable the company to scale rapidly, they remain committed to promoting financial inclusion, as O’Brien explains, “The company began by enabling everyday people to co-fund loans. We will continue to operate our impact investor community for smaller loans. At the same time though, we can help deliver homes at the necessary scale. By partnering with Credit Unions, we will indirectly continue to promote financial inclusion also, enabling Credit Unions to access the property market in a sustainable way by lending to AHBs.”
Initiative Ireland also see their dual offering, of funding developers and approved housing bodies, as offering unique value to both sides. Padraig W. Rushe explains, “By funding both developers and approved housing bodies, we can bring both sides to the table where needed. Our goal is to remove roadblocks for developers. When you combine our institutional funding lines with our flexible impact investor community and values-based approach, we really are building something unique to support housing delivery like never before”
For more information on Initiative Ireland, visit InitiativeIreland.ie or to get in contact call 01 – 685 9259 or email [email protected]