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Ireland’s 1st Peer-to-Peer Funded Property Development

Written by Robert McHugh, on 7th Dec 2017. Posted in Ireland

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Ireland’s first Peer to Peer property-backed loan of €1.5m was launched by Initiative Ireland today. This positions the finance company as Ireland’s 2nd Largest Peer to Peer Lender.
The loan was made to North Strand Five Lamps limited, to finance a social housing development in Dublin 1, consisting of 10 apartments and a ground floor cafe. With full planning in place, the development is expected to deliver the units to the market in late 2018.

The first loan of its kind in Ireland, at €1.5m it is the single largest peer to peer loan approved in Ireland to date. It is the first of many according to the CEO, with the company aiming to finance up to €60m by the end of 2018, supporting the construction of over 250 new family homes. 
As Private Lending Members, individuals and institutions can sign-up for free to view loans via the platform, which are pre-approved by the company’s experienced Credit Committee prior to listing via their digital platform. As an approved Private Lender, individuals can earn returns of 3.00% to 8.00% APR on their committed funds, dependent on the risk tier and loan term they select. 

Each loan is secured with a first legal charge over the properties and whilst committed funds accrue interest monthly, these are only released to the borrower on a phased basis. Initiative Ireland approve the release of funds provided they are satisfied with the ongoing reports from their appointed Quantity Surveyors and Relationship Management Team.  This helps to ensure the release of funds occurs in line with the completion of works and scheduled increasing value of the site. 
Peer to Peer lending, which has become popular in the US and UK, (where it now exceeds £3.2bn) enables individuals and institutions to pool funds and collectively finance loans together, as an alternative method of offering finance to businesses and individuals. Traditionally, peer to peer lenders offer unsecured, high-cost loans to businesses which are otherwise unable to secure finance. 

In contrast, Initiative Ireland offers market leading loans, at mainstream finance rates, to attract experienced property developers. In return for the attractive borrowing rates, these developers provide a first legal charge over their properties to the company, which is held from day one for the benefit of Initiative Ireland’s Private Lending Syndicates.

Initiative Ireland aims to provide competitive terms and rates, exclusively to experienced property developers. Primarily focused on residential developments which have full planning in place, the company will consider loans of up €10m. Each loan is carefully assessed and pre-approved by an internal credit risk committee prior to syndication amongst members and must meet those standards set by the company and their Primary Credit Partners.

Speaking today, CEO of Initiative Ireland, Padraig W. Rushe said, "At a time when many sophisticated investors are looking to diversify beyond equity, we’re making secured real estate debt accessible to investors through our syndicated finance platform. We’ve already seen solid demand from our Private and Institutional Members, with many indicating their intention to commit additional funds via the platform. Since launching the platform in October, we’ve seen high volumes of new borrowers and lenders attracted by our Peer to Peer, Property Backed Loans." 
He added, "Feedback from private members has been extremely positive. Experienced peer to peer lenders find our rates very attractive compared to unsecured business loans they’ve funded in the past. First time lenders have responded positively not just to the attractive rates offered, but also to the idea that they can do something to help fund the building of additional homes across Ireland. At our rates, even small projects become viable where before they were priced out of the market… so our members are helping to make a difference."

Source: www.businessworld.ie

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