Private equity firm GI Partners (GI) and investment advisory firm Principal Company have acquired EUR214 million (face value) of first lien, non-conforming residential mortgages whose underlying collateral assets are in the Netherlands.
Following an improvement in the Dutch unemployment rate, which is a key driver of borrower defaults, and other positive economic indicators, GI Partners believes it is an opportune time to invest in the Dutch residential housing market.
At closing, the transaction was funded by capital from GI Partners Fund III LP and Principal Company as well as mortgage-backed debt provided by Natixis. Simultaneously upon the closing, a special purpose vehicle issued EUR103.8 million of mortgage-backed securities rated Aaa(sf) by Moody’s Investors Service and arranged by Natixis.
GI Partners’ Managing Director Phil Kaziewicz says: “We are delighted to have acquired this portfolio which we believe will generate an excellent risk-adjusted return for our investors, including an attractive annual cash yield. We are also pleased to have concurrently issued a significant tranche of rated securities in a challenging ratings environment. We hope that this transaction is the first of a number of similar transactions where GI can invest, through either equity or debt securities, in real estate loan pools throughout Europe. We are also pleased to have underwritten, structured and purchased these assets with our partner, Principal Company.
“This transaction is consistent with GI’s investment strategy of purchasing assets with strong downside protection while at the same time taking advantage of the continued retrenchment from non-core businesses by global financial institutions. It also allows us to leverage our domain expertise within the financial services sector.”
Kornelis Lammerts, Managing Director of Principal Company, says: "Working together with the GI Partners team, we identified this seasoned pool of residential mortgages and were able to acquire it at an attractive purchase price. We are currently evaluating a number of other similar investment opportunities in the Benelux region with GI Partners."
