ISIF to launch €100m fund for office development

The State-backed Ireland Strategic Investment Fund has teamed up with a US real estate fund to offer up to €100 million to finance high-quality office development and construction projects.

Quadrant Real Estate Advisors, which has almost $6 billion in assets under management, and sources its funds from public pension funds and sovereignwealth funds, will invest up to € 50 million of capital. The €7.5bn ISIF, which is controlled and managed by the National Treasury Management Agency (NTMA), will also invest up to € 50 million.

The investment has the potential to create in excess of 1,500 full-time construction jobs, and it is anticipated that it will accelerate the delivery of urgently required prime office space.

“At present, there is a clear lack of comprehensive development finance packages for high-quality office development and construction opportunities and this investment mandate will help deliver commercial premises which meet the growing requirements of the marketplace,” said ISIF director Eugene O’Callaghan, adding that the deal is a “good example of ISIF’s flexibility and capacity to act as an “accelerator” when commercially attractive investment opportunities arise.”

Quadrant has completed a number of finance deals in Ireland and the UK over the past year during which time it has deployed over € 100 million to finance real estate projects in Dublin, Liverpool and Manchester. The fund is also in active discussions with a number of Irish developers in respect of projects including hotels and residential developments in Dublin and other locations which will be financed from Quadrant’s wider client base.

Kurt Wright, CEO of Quadrant, said that the company would address an important gap in the market: "Finance for office development projects is in short supply in Ireland with the main banks restricting their finance to the lowest risk projects which have letting or sale agreements in place from the outset. We will work with developers in the early stages of projects where the risks are higher but where the rewards are greater."

ISIF was established in December 2014 with a statutory mandate to invest on a commercial basis in a manner designed to support economic activity and employment. Earlier this year the fund said it would commit between € 500 million and € 1 billion to projects in the Republic in 2015. Since its inception in December 2014, ISIF has invested in companies including biotechnology specialist, Malin Corporation, chocolate maker, Lily O'Brien's and software developer, Movidius.

During the summer it linked up with US private equity fund KKR to provide funding of up to €500 million to residential property developers in an effort to ignite the stalled development market and boost supply.