M&G Investments has completed the largest acquisition financing of Dutch residential property since the start of the credit crisis. With a €110 million senior commercial mortgage M&G, as a relative value investor, again shows its ability to underwrite large loans and its commitment as a large lender in European residential portfolios.
The senior mortgage financing is backed by a portfolio of 1,250 residential units in the Netherlands plus several commercial properties. The Dutch sponsor acquired the portfolio from several vendors. The portfolio is well diversified across the country with the largest property in the portfolio being a 2008 apartment complex in Amsterdam, but also includes properties in Groningen, Heerenveen and Rotterdam.
The loan of €110 million has a term of 10 years and represents leverage of 65% Loan to Value. The innovative structure of the loan – with a part fixed and part floating rate – has allowed M&G to move away from the more rigid bank financing typically available in the Dutch market, and this provides the borrower with a high degree of flexibility and also helps to match the investment appetite of M&G’s clients.
M&G is not aware of any other non-bank transactions of this kind in the Dutch market since the start of the financial crisis.
This loan shows M&G’s ability to underwrite large Euro denominated transactions in markets that have until recently seen limited liquidity. M&G was one of the first major institutions to identify the investment opportunity in real estate finance. Earlier this year M&G also financed two European shopping centres: the Jervis Shopping Centre in Dublin and Puerto Venecia in Zaragoza, Spain.
Paul Dittmann, head of senior mortgages at M&G Investments, says: “This good quality portfolio being bought by a Dutch sponsor was the right transaction for us to enter the Dutch market with this senior mortgage financing loan. The Dutch market, both in the commercial as in the residential area, has had a difficult period and fundamental problems but, for investors such as M&G with good resources and client capital to deploy, there will always be relative value opportunities.
“We have been and still are a large lender to residential portfolios in the UK and Germany, and the asset class is well suited to our investor base. The Dutch market has its own particularities, including a high level of regulation in both the rental market and owner occupier market, but on the whole this was an appealing investment for us.”
Source: M&G Investments