Urbeo Residential plans up to €400m raise for Irish PRS

By Paul Norman - Wednesday, March 14, 2018 7:00

Urbeo Residential, a mixed-tenure Irish housing fund, is planning to raise €300-400m to scale up its investments in the Irish private rented sector.

The fund is focused on "providing quality rental housing in the underserved segments of low and middle-income households, principally in Dublin, but also other Irish cities".

Urbeo has appointed Deutsche Bank and Goodbody Stockbrokers to advise on the fund raising, targeting institutional investors seeking long-term stable returns.

Urbeo has fully let its initial pilot scheme in Tallaght, Co Dublin: the 131-unit New Bancroft development was acquired in July 2017 for €33m, in an investment backed by, among others, the Ireland Strategic Investment Fund (ISIF), an €8bn Irish Government owned fund that invests with a long term time horizon on a commercial basis. Subject to certain conditions being met, it is proposed that ISIF will be an anchor investor in the planned scaling up of the fund, with capacity to commit up to €100m on a co-investment basis.

Urbeo has also recently signed a Strategic Relationship Agreement (SRA) with Glenveagh Living, a subsidiary of Glenveagh Properties PLC, a leading Irish homebuilder. Under the terms of the SRA both companies have committed to collaborate on the sourcing, acquisition and development of residential communities, with Urbeo acting as a potential acquirer of Glenveagh built developments.

Urbeo’s model is focused on matching investor needs for long-term stable returns with those of tenants to build stable and sustainable communities of rental housing, including social and affordable housing. The Fund is targeting a stabilised dividend yield of 4.5–5% and levered IRR of 8–10%.

While not acting as a developer itself, Urbeo will seek to partner with builders, developers, and housing associations to deliver new rental housing projects in non-prime but well-serviced locations.

Felix McKenna, CEO of Urbeo Residential said: “We believe there is a clear gap in the market to provide a quality rental housing option to low and middle-income households. Our aim is to create balanced and sustainable communities where the long-term stable tenant base is aligned with the requirements of investors for steady, secure income.

"The residential rental sector has become an increasingly important asset class in recent years because it can provide a reliable income stream and diversification from other real estate asset classes. We are providing the first opportunity to invest in scale in European-style rental developments in Ireland, the type of which are long overdue in a market that has seen extremely rapid increases in residential rents in recent years.”

McKenna is a former senior asset manager at Ireland’s National Asset Management Agency (NAMA) where he helped build the agency’s social housing portfolio. He is also the former Head of Property at Eir (the former State telecoms company), and joined Urbeo in October 2017 as CEO. Aidan Culhane, a former special adviser on planning and housing policy at the Department of Housing, is Urbeo’s Director of Housing.

Initial investors, and Urbeo Residential co-founders, include Bill Nowlan and Frank Kenny who were behind the establishment of Hibernia REIT Plc in 2013, a successful Dublin office focussed REIT with a portfolio valued at over €1.2bn.



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