In November 2022 the Central Bank of Ireland ('CBI') published its Feedback Statement to CP145: Macroprudential measures for the property fund sector. From November 2021 to February 2022, they consulted on a proposal to introduce macroprudential limits on leverage and to provide guidance to limit liquidity mismatch for Irish-authorised property funds (subject to AIFMD). AREF didn't respond to the consultation as the proposed measures didn't affect current AREF Fund Members.
The core elements of the measures put forward in CP145 were retained in the final policy measures with a few adjustments as set out in the Feedback Statement. CBI has introduced two policies that are part of its framework on property funds macroprudential policy:
- A sixty per cent leverage limit on the ratio of property funds’ total debt to their total assets and;
- Guidance to limit liquidity mismatch for property funds.
The measures apply to Alternative Investment Fund Managers ('AIFMs') of Alternative Investment Funds (AIFs”') that are domiciled in Ireland, authorised under domestic legislation, and investing fifty per cent or more directly or indirectly in Irish property assets.
CBI have provided a five year implementation period to allow for the gradual and orderly adjustment of leverage in existing property funds. They have provided an 18 month implementation period for existing funds to take appropriate actions in response to the Guidance. CBI will only authorise new funds if they meet the sixty per cent leverage limit, while it expects that property funds authorised on or after 24 November 2022 would adhere to the Guidance from inception.
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