Dáil Éireann Debate, Thursday - 18 May 2017
24. Deputy Michael McGrath asked the Minister for Finance the amount of lending carried out by a company (details supplied) to date in 2017 to the construction sector; his views on whether the State can do more to ensure the construction sector has access to finance to build the required homes and office accommodation around the country; and if he will make a statement on the matter. [23533/17]
Amharc ar fhreagraThe Ireland Strategic Investment Fund (ISIF), in line with its double bottom line mandate, has to date invested in a number of significant financing platforms and projects in the construction sector, and is actively examining other investment opportunities.
ISIF invests on a risk-adjusted basis in the various housing financing platforms and these platforms, in turn, provide finance, also on a risk-adjusted basis, to developers, which can be equity or debt according to the business model of each platform. The interest rate applied to any individual debt financing arrangement therefore relates to the level of risk and other investment factors in the underlying housing development proposal.
ISIF has total investment commitments to housing investment vehicles of €404 million comprising €325 million in Activate Capital, €25 million in the Ardstone Residential Partnership and €54 million to student accommodation in DCU. In addition ISIF has committed €125 million in total to more general real estate investment vehicles, including €75 million to the Wilbur Ross Cardinal Commercial Real Estate Mezzanine Debt Fund and €50 million to Quadrant Real Estate Advisors, both of which to date have completed some investment in housing. Through these ISIF-supported projects, a total of 8,400 housing units is expected to be delivered in the near term (a small portion of which has already been delivered).
In addition, ISIF's current near term pipeline of potential housing projects including in the build-to-rent sector and off-campus student accommodation as well as a smaller project that may have the ability to deliver some affordable housing, indicates potential to deliver a further 8,700 units in total.
The principal residential development finance lending vehicle which ISIF has invested in to date is Activate Capital.
ISIF is also examining the feasibility of establishing, in conjunction with the private sector, a Housing Investment Fund which would be capable of funding the delivery of substantial new mixed-tenure residential developments, comprising social and private housing, in a way that is both off-balance sheet and commercially viable. Engagement with a wide array of key stakeholders in both the public and private sector, including with Eurostat, is ongoing and involves the input of relevant Government departments, the CSO and others.
In the area of financing infrastructure which enables residential development, ISIF is seeking to structure solutions for a number of opportunities with a focus on sites of scale and strategic importance. ISIF is seeking to work alongside other sources of funding including LIHAF (Local Infrastructure Housing Activation Fund), Local Authority resources and commercial investment. A private sector pilot project (totalling approximately 3,000 units) is actively being progressed by ISIF. Public sector projects (also totalling approximately 3,000 units) are currently being considered – the extent to which these projects can be progressed will in part depend on whether LIHAF or other forms of financing can be leveraged to complement ISIF financing.
These ISIF actions demonstrate the substantial State commitment to assisting the construction sector to access finance. I am fully conscious that these measures must be carefully balanced by monitoring their impact to ensure that State actions are not exposing the State's balance sheet to excessive risk.
