PIMCO is to refinance its first Irish purchase this cycle, less than 18 months since the deal was first struck.
Project Ulysses, a joint venture between the US fixed income giant and Brehon Capital, was purchased in January 2014 for €152.5m (£113m).
Some €100m of the purchase price was originally provided by Morgan Stanley on a five-year term and priced at just under 400bps over Euribor. But such is the dramatic improvement in the financing market that an early refinancing is being pursued.
PIMCO is now seeking to secure a deal that undercuts the existing margin cost by 200bps.
The fund is understood to have approached a small number of banks to provide the finance, including Bank of America Merrill Lynch and existing financier Morgan Stanley, which is keen to keep the deal on its books.
PIMCO is looking for terms with a margin of just over 200 bps to finance the portfolio of 25 Irish assets that had a book value in 2007 of more than €2bn.
The original loan to value on the deal was close to 65% and the new financing is expected to be at a similar level. However, values for such assets have risen by around 25% since the purchase, and so too will the size of the new financing.
The approach is another sign of returning faith in the Irish property market. PIMCO is looking to replicate the successes it has seen other borrowers achieve this year that have driven down costs.
Last month Morgan Stanley refinanced the Blanchardstown shopping centre near Dublin for Green Property. The bank extended a €750m whole loan at a margin of just over 200bps.
Morgan Stanley also financed Starwood Property Trust’s €350m purchase of four office properties in Dublin from Lone Star with a €245m loan in March at a margin of 190bps.
CMBS has been proven as a viable exit for banks lending in Ireland after Deutsche Bank’s successful marketing of its £126m DECO 2015-Harp issue in March, based upon underlying loans secured against properties in and around Dublin.
