US Investor has €2 billion to spend on Irish Construction Industry
US investor Avenue Capital could spend €2 billion over the next four years funding home and commercial building in the Republic after buying a stake in local lender, Castlehaven Finance.Castlehaven confirmed on Friday that Avenue had bought out Pollen Street, the Irish company’s previous backer, for more than €250 million, giving it both a stake in the Dublin-based lender and ownership of loans given to builders.
Avenue intends lending €500 million annually for the next four years through Castlehaven to developers to fund the construction of new homes, shops, offices and hotels.Outside the €250 million or so that the fund is spending on buying into Castlehaven, this will bring its total investment in the Republic to €2 billion over the next four years.
Avenue hopes to cash in on the demand for rented homes by lending to developers to build apartment blocks that can be sold to investors who will lease out the individual homes to tenants.
Existing players such as Cairn Homes, which last year sold an apartment block on Dublin’s Hanover Quay to Carysfort Capital for €101 million, and is selling a similar property in the city’s western suburbs, have already taken this route.
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Avenue and Castlehaven also hope to expand into backing commercial building, including hotels, offices and shops. Using cash provided by Pollen Street, Castlehaven recently financed a 149-bedroom hotel on James Street in the capital for the Dublin Loft company, a business owned by Mark, Andrew and Kelly Cosgrave.
The deal announced on Friday means that Avenue will step into Pollen Street’s shoes. Castlehaven will find the builders and projects to which the US company will lend its money.
The Irish business will be responsible for managing the loans and dealing with the clients. Avenue is taking a stake in Castlehaven and will pay it a fee for acting on its behalf. The pair are understood to be days away from backing their first project.
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