I presume the Deputy is referring to Activate Capital, Activate, which is a non-bank financing platform established by the Ireland Strategic Investment Fund, ISIF, and the global investment group KKR to invest on a commercial basis in residential development projects in Ireland to help address the current supply shortages in the main urban centres. Activate is focused exclusively on lending for Irish residential projects and will target, in particular, new residential development in Dublin, the greater Dublin area, Cork, Limerick and Galway which have been identified as the areas of greatest demand. Activate is a €500 million fund, which is financed through a €325 million loan note provided from ISIF and a €175 million loan note provided from KKR. The €500 million fund represents the peak funding outlay at any one time. As borrowings are repaid, additional lending capacity over and above the original €500 million will be created.
Activate will provide up to 90% of project funding and will provide funding for both the acquisition of land and to bring projects through the planning process. The Activate base lending rate is approximately 10% and, as would be expected for projects of this nature, there is participation in equity upside if projects are successful so that the fund shares in any gains alongside the project promoter. The pricing for Activate facilities reflects the provision of up to 90% of overall development cost and the fact that it is, in effect, taking a combination of debt and equity risk. Activate also offers the advantages of deliverability and speed of execution. The Activate model is capable of substantially quicker credit turnaround times than current average timeframes in the market on foot of the requirement, typically, for project promoters to deal with more than one lender and sometimes multiple lenders. It is estimated that Activate will, in this way, be capable of financing the construction of over 11,000 new homes in Ireland.
Activate has been operationally up and running since January 2016 and in that time has created a significant pipeline of investments. Activate recently announced the completion of three transactions that will deliver approximately 800 new residential units in the Dublin area.
Additional information not given on the floor of the House
Activate has stated that a number of other transactions are progressing. In terms of disclosing the commercial detail around the draw-down or pricing of loans, this is commercially sensitive information and therefore not appropriate for release.