Irish listed firm Real Estate Opportunities is set to launch the first securitisation of a major Irish property portfolio.
German bank Eurohypo is arranging a €375m, seven-year loan for REO, an investment company with property assets of more than €850m. The deal will free up €70m of cash and cut REO’s interest costs by €2.8m per year.
The loan will be securitised through Eurohypo’s Opera Finance structure against 16 retail and office properties, 15 in Dublin and one in Cork, worth €500m.
Guy Leech, finance director of private Irish company Treasury Holdings, which owns a controlling stake in REO, said: “Spreads on commercial mortgage-backed securitisations have narrowed so much in the past few years that securitising debt is now a much more cost-effective option. Issues with Irish insolvency and tax law have made it difficult to securitise portfolios, but the pricing now makes it worth the cost and effort.”
The cash released by the deal will be invested in property in Ireland and elsewhere. REO has already made a small investment in China.
