Relm Finance prepares to launch its fourth fund

Relm Finance, the Irish non-bank lender specialising in commercial and residential property investment, is preparing to launch its fourth fund with more than €300 million potentially available to be drawn down.

As with previous funds, this one is backed by Avenue Capital Group, a large New York-headquartered investment group.

“We’ve developed a great partnership with Avenue. We work closely together and they are not afraid of larger €50 million-plus deals, while giving us the flexibility to execute smaller lot sizes too,” Relm’s chief executive Paul Dowling told The Irish Times.

Relm has grown its book from zero in June 2017 to more than €600 million by the end of last year. It typically lends for terms of three to five years, with interest rates of about 6 per cent and loan-to-value ratios of up to 80 per cent. About €150 million of loans has been redeemed, with no defaults to date, Mr Dowling said.

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“We’ve deployed around €750 million to date and the balances at present are around €600 million. We are nearing the end of the first cycle of loans we deployed in 2017 and 2018, and we have a pipeline of over €100 million. These are new loans, many to new borrowers, demonstrating our leading position in the market.”

Speedy decisions

Mr Dowling said its business model has been built around speedy decision making, with drawdowns often possible just five weeks after the first enquiry is made.

He said Relm closed its share of the Cosgrave property group’s exit from Nama in just six weeks in the fourth quarter of last year. That deal was reportedly worth more than €350 million, with Relm providing a major part of the funding for its commercial real estate portfolio.

Castlehaven Finance, also funded by Avenue Capital Group, provided the development finance. “We actually came late to the party on that deal”, Mr Dowling said. “So we had to hustle but went home with the deal in the end. The loan is performing well and they are best in class asset managers. We’re delighted with it.”

The non-bank lending market has provided liquidity to the property market as an alternative to traditional banks, who have been risk averse since the 2008 property crash. However, the sector is becoming crowded with several other funds coming to market in the past 18 months.

Relm is financing four pubs at present, three in Dublin and one in Galway, all with loans sizes of about €13 million. It recently provided funding to a vehicle used by Paddy McKillen jnr to acquire the former Larry Murphy’s pub on Baggot Street for a reported €1.7 million.

Relm, which stands for real estate loan management, is led by three experienced former AIB executives: Mr Dowling, head of origination Armand Lako, and David Renwick, its chief risk officer. All three are shareholders in the business.