Pepper Money to offer commercial property loans in Ireland

Lender hopes to issue €300m worth of commercial mortgages within two years

“We will continue to explore new markets here. We’re still looking at personal loans and the auto finance business”, said Pepper Ireland CEO Paul Doddrell.

“We will continue to explore new markets here. We’re still looking at personal loans and the auto finance business”, said Pepper Ireland CEO Paul Doddrell.

 

Australian lender Pepper Money has set up a new sales division here to offer commercial mortgages from this month, with loan values ranging from €250,000 to €7.5 million.

Pepper said it hopes to issue about €300 million worth of commercial loans in Ireland over the next two years.

“It will take a while to build the pipeline . . . we’re targeting the smaller end of the market,” Pepper’s chief executive Paul Doddrell told The Irish Times. “But we expect there will be a good level of enquiries.”

This move follows on from Pepper’s entry into residential mortgages at the beginning of 2016. Pepper said its commercial lending rates would start from 5 per cent, subject to certain conditions.

The company plans to provide loans to professional buy-to-let borrowers seeking to refinance or acquire new commercial properties. These could include SMEs, family businesses and investors with single and multi-property proposals.

It also plans to offer loans to borrowers with “historic credit issues” but who are now up to date with their payments and finding it difficult to obtain finance or to refinance.

Commercial borrowers

Mr Doddrell said there was room in the Irish market for “new entrants” to “address the needs of commercial borrowers, such as those looking to refinance or grow and develop their businesses”.

“It was always our intention to expand our lending offering to include commercial products and to date we have been successful at attracting customers by offering more choice and competition for all borrowers, but especially those with otherwise limited options,” he said.

Pepper is perhaps best known in Ireland as the owner or servicer of legacy loan books that were once owned by financial institutions who quit the market following the global financial crash in 2008.

It is currently managing about €17 billion in loans, split roughly 50-50 between commercial and residential.

In terms of its residential mortgage offering, Mr Doddrell said some €150 million worth of mortgages have either been drawn down or are in its pipeline to be issued. He said the average residential loan issued here amounted to €200,000.

‘Question of supply’

“We’re slightly behind where we’d like to be [on residential lending] but it’s the same with all the lenders here. It’s a question of supply and new housing being built. The level of engagement from potential customers is strong but they find it hard to secure houses. It’s a real challenge.”

Mr Doddrell said Pepper would like to expand its portfolio of products in the Irish market over time.

“We will continue to explore new markets here. We’re still looking at personal loans and the auto finance business,” he said. “But this [commercial lending] will keep us busy for the next year or so.”

Pepper Money is part of Pepper Group, a diversified financial services business listed on the Australian Securities Exchange that had about €34 billion in assets under management at March 31st, 2017.

Its Irish business is regulated by the Central Bank of Ireland and employs more than 400 staff in Dublin and Shannon.