The Central Bank of Ireland (CBI) has announced new rules that will apply to Irish regulated funds that invest 50% or more, directly or indirectly, in Irish property assets.

The most significant provision is the implementation of a 60% debt to total asset leverage limit. Both third party debt and shareholder loans count toward this 60% limit.

There is a carve-out from this leverage limit for certain funds that invest primarily in social housing but that carve-out is subject to a number of caveats.

The leverage limit applies immediately for all new funds authorised since 24 November 2022. For existing Irish regulated funds, there is a 5 year implementation period though the CBI has said it expects funds that need to get below the limit to have made significant progress within 3 years. The CBI has also said that it will expect any existing Irish regulated property fund that is over the 60% leverage limit not to incur additional debt while it is over the limit (or that would bring it over the limit).

The rules announced by the CBI also include new guidance for Irish regulated property funds that offer redemption facilities, effectively requiring them to have a minimum redemption period of at least 12 months from the redemption request dealing deadline to the date of payment of the redemption proceeds. Again the guidance applies immediately for all new funds authorised since 24 November 2022. There is an 18 month implementation period for existing regulated property funds in this regard. This is less significant as most Irish regulated property funds are either closed-ended or heavily limited liquidity, such that this provision would not cause undue concern.

The CBI’s paper outlining the guidelines can be found here and our further analysis can be accessed here.

For further information on this topic, please contact Michael Barr, Partner, or any member of A&L Goodbody’s Asset Management & Investment Funds team.