Canadian real estate fund Timbercreek Investment Management Inc. is launching its second Irish property fund to take advantage of the Brexit chaos, which is driving companies out of the United Kingdom and into cities such as Dublin.
Toronto-based Timbercreek has invested $9-billion in global property markets, by both directly owning buildings and making real estate loans. The fund began lending on Irish projects from an office in London in 2012. Timbercreek chief executive Blair Tamblyn said he quickly realized that relatively low competition from rival lenders and strong demand for commercial real estate financing meant “Ireland offered far better opportunities than markets such as London and other major European centres.”
In 2017, Timbercreek opened an office in Dublin with a three-person team and raised a €200-million ($300-million) dedicated Irish real estate debt fund. By the end of last year, the fund had made 19 mortgage loans totalling €118-million on office buildings, retail and residential properties, and the portfolio earned a 7.9-per-cent annual return.
It recently launched a second Irish real estate finance fund for institutional clients, which include pension plans, insurers and wealthy individuals. The new fund still needs to be approved by Canadian regulators, and Mr. Tamblyn could not comment on specifics, but it is expected to be larger than the employee-owned firm’s first Ireland fund.
Timbercreek’s Irish operations are led by Paul Roddy, who previously worked at the Irish Bank Resolution Corp., a government-controlled entity created in 2009 to manage two failed banks. In an interview, Mr. Roddy said the threat of Brexit has already seen companies in sectors such as banking, insurance, pharmaceuticals and technology expand their operations in Dublin, often by moving employees from offices in London, and more immigration is expected. “Ireland will represent a unique opportunity for foreign companies to maintain access to both the European and U.K. markets,″ he said.
Ireland was hit hard by the global financial crisis of 2008, and Mr. Roddy said many commercial properties have been poorly cared for since then and need significant renovations to meet the needs of global companies moving to the country. Timbercreek expects to finance upgrades to these office and retail properties. In addition to rising demand for office space, he said Dublin’s residential real estate market is being squeezed by incoming workers who need a place to live, and Timbercreek expects to lend to condominium developers.
Ireland’s real estate market features domestic and international lenders willing to provide large mortgages on major buildings and developments, but very few mid-market players willing to lend on smaller properties, according to Mr. Roddy. So Timbercreek’s focus is on making short-term mortgage loans on mid-sized commercial properties. For example, the firm’s first Irish fund made a $34-million loan on a student residence that will be repaid in 25 months, as well as a $16.3-million, 24-month loan on a retirement home.
Timbercreek was founded in 1999 and initially invested directly in real estate. The company now owns 200 apartment buildings with 23,000 units. The fund began lending on properties in 2007 and expanded that expertise in 2016 by hiring veterans of General Electric Co.'s real-estate division, including Timbercreek global head of debt Bradley Trotter, a former president of GE Capital’s North American real estate unit.
Timbercreek is the latest in a series of Canadian financial companies to invest in Ireland during troubled times. Prem Watsa’s Fairfax Financial Holdings Ltd. was part of a consortium that recapitalized the Bank of Ireland in 2011 and exited the holding after about four years, pocketing a gain of more than €500-million. Desmarais family-controlled Great-West Lifeco Inc. acquired Irish Life Group Ltd. from the country’s government in 2013 for $1.75-billion, and Irish Life subsequently made a series of small acquisitions in the country.
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Andrew Willis