Cullaun Capital enters property market to finance housing

A new fund that plans to lend to Irish property developers for the construction of new houses went live on Tuesday, and has set a target of financing the building of thousands of homes in Ireland within the next three years.

Cullaun Capital is a joint venture between three property and financial services executives based in Ireland and TPG Sixth Street Partners (TSSP), a global credit investment firm with more than $20 billion (€17.3 billion) in assets under management.

US-based TSSP owns a majority share of the new fund and will provide it with the capital it needs to lend to developers.

Led by former Ulster Bank chief risk officer and board member Stephen Bell, the fund plans to offer developers up to 90 per cent funding of their overall project costs.

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Its initial focus is on projects in the greater Dublin area, Cork, Galway and Limerick. The non-bank lender wants to partner with “quality homebuilders” to provide finance for projects with a minimum value of €2 million.

Mr Bell’s co-founders are head of origination Daire McCarthy, who is a chartered surveyor and has more than 18 years of experience in banking and finance, including time with Bank of Ireland and Investec; and head of portfolio management Noel Ross, who has worked with loan providers in Ireland and the UK over the past 15 years.

Multiunit developments

Speaking to The Irish Times, Mr Bell said it would provide funding to support small, medium and large-sized, multiunit housing developments. "We would be disappointed if we haven't funded the construction of thousands of homes here over the next two to three years," he said.

He declined to put a figure on how much lending the group is targeting in its first year but said it has “hundreds of millions of euro available if we need it”.

Mr Bell, who left Ulster Bank in 2015, said it would charge rates of 7-9 per cent, with an additional fee of 1 or 1.5 per cent on the way in and also on exit.

With domestic banks remaining cautious about how much finance they will provide to building projects, many Irish developers complain about difficulties in accessing capital. Cullaun wants to help plug that gap.

“Ireland requires more housing and this need will be met through a range of projects, ranging from four- to five-house schemes, to large-scale multiphase developments,” Mr Bell said. “Funding for these projects has been a challenge and we want to support quality developers by helping to bring their business plans to fruition. We want to make a meaningful contribution to addressing Ireland’s housing shortage.”

Social housing considered

He said Cullaun was “open” to partnering on projects with other lenders of scale, including banks, and it will also consider funding for social housing and student accommodation. “The only limit will be on the quality of projects that we get. I’d like to think that we’ll be doing this for a very long time.”

Cullaun was incorporated in early April and Mr Bell said a “few conversations” had already taken place with developers seeking capital for their projects.

TSSP was set up in 2009 and has a long-term, “highly flexible” capital base that allows it to invest across industries, geographies, capital structures and asset classes.

It is part of TPG, a leading global alternative asset firm founded in 1992. TPG has more than $79 billion worth of assets under management and offices in the United States, Beijing, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, Seoul and Singapore.