Avestus Capital Partners, the real estate investment company founded by four former Quinlan Private executives, has raised an initial €160 million of equity for a new fund dedicated to investing in homes in the Irish private rented sector.
The fund, which has received €25 million from the Ireland Strategic Investment Fund (ISIF) as well as investment from Nordic and German institutional investors, will be leveraged up to €290 million through debt. ISIF may invest a further €25 million of equity into the fund as it expands further.
Demand for rented accommodation in Ireland has doubled over the past five years driven by demographic growth and increasing urbanisation, trends that are set to continue, according to Avestus. The Irish rental market is very fragmented and under-invested with over 95 per cent of rental portfolios comprising less than five properties.
The private residential rental sector has been one of the hottest segments of the commercial market this year. As of the first quarter of this year, rents had surged by 87 per cent in Dublin and 68 per cent in other Irish cities from the low point during the crisis to surpass Celtic Tiger peaks, amid a dearth of available properties, according to Daft.ie, the online property website.
Deals in recent months include Irish Life's purchase of 262 apartments from Park Developments in Churchtown in south Dublin for €138.5 million, US group Kennedy Wilson's acquisition of 274 apartments and a site at The Grange in Stillorgan, Co Dublin, for €160 million.
Ownership
Last month, publicly-quoted Cairn Homes agreed to sell an apartment complex at Six Hanover Quay in Dublin to a company managed by Carysfort Capital for €101 million.
"We believe that the private rented sector in Ireland will become more significant in the future as the market evolves and institutional investors increase their ownership," said Thomas Dowd, a principal at Avestus.
Avestus is currently managing a portfolio of more than 800 privately rented properties in Ireland, making it one of the largest participants in this sector in the country.
The new fund will look to make long-term investments in high-quality, income-producing assets in attractive locations, close to major employment hubs and key transport links. It will also identify and commit to forward purchase newly developed rental properties, supporting the construction of new homes in Ireland, which is a key Government priority and ISIF funding is exclusively focused on such investment.
Glenveagh Properties, the fledgling Irish homebuilder backed by US private equity firm Oaktree Capital, identified, for example, at the time of its flotation last year that the contracted development of rental properties for investors will be a key area that it plans to operate in.
Avestus has over €1 billion in assets under management on behalf of a wide range of blue chip institutional investors. Current investments are spread across more than 40 residential, office, retail and hospitality assets located in Ireland and Europe. The company was in the news last month as residents opposed its €80 million plan to build 94 apartments in Donnybrook, Dublin 4. This development is separate to the new fund.
