€100m fund lets property owners buy loans from 'vulture funds'
Published 10/10/2016 | 02:30
Specialist lender Finance Ireland is rolling out a €100m fund it says will help Irish property owners refinance their property debts away from so-called vulture funds.
The company says it expects the new fund will be fully deployed over the next 12 months, financing commercial property-backed investments in the €1m to €6m range.
A big focus is providing funds to owners whose bank loans have been bought by mainly US-based investment funds, allowing them to buy back the debts - potentially at a discount.
Dublin-based Finance Ireland was founded in 2002 by former Irish Permanent chief executive Billy Kane.
It is best known as a non-bank lender to small and medium enterprises (SMEs) and the farming sector, and for its motor and assset-based finance arms.
Its Finance Ireland Commercial Mortgages unit said it has now raised €100m to lend to commercial property owners to finance exits from vulture funds.
"Once a property owner is close to negotiating a deal with the vulture fund, they need to look at refinancing and that's where we come in," said Ken Murnaghan, managing director of Finance Ireland Commercial Mortgages.
The loans are targeted at rent-generating investment and commercial property, but not development sites.
Typical deals will offer five- year term loans at interest rates of 7pc to 9pc at a 75pc loan to value ratio, he said.
The fund has been raised from a mix of equity and bank debt. "We are Irish owned and managed and because we were the first Irish specialist lender to raise term debt on international markets we have full authority to make our own lending decisions.
"We know the market intimately and we don't have to refer back to a head office to approve or second guess what we want to do. That gives a lot of comfort to our customers," he said. Mr Murnaghan worked at Ulster Bank and AIB before joining Finance Ireland.
"We are comfortable refinancing deals from loan funds, it's a specialised part of the business and our processes suit that," he said.
Finance Ireland's backers include US investment giant Pimco, which holds what the company says is a significant minority shareholder after investing significant equity this year.
Also this year Glanbia Co-op, the Ireland Strategic Investment Fund, and Rabobank tapped Finance Ireland to manage a €100m fund set up to provide flexible credit for dairy farms hit by volatile pricing.