Real Estate Opportunities (Reo), in the first deal of its kind in Ireland, is raising €375 million through a seven-year loan secured against 16 of its properties .
The property securitisation, which is being arranged by the German bank Eurohypo for Reo, will replace existing borrowings, cutting the company's interest bill. "This is an innovative transaction that will allow Reo to make substantial annual interest savings, estimated at €2.8 million, while freeing up cash," Reo chairman Ray Horney said.
"The deal will allow Reo to pursue further expansion opportunities in the real estate markets in Ireland and elsewhere."
Reo's finance director Guy Leech said the company was currently looking at a number of deals in Ireland while it is also interested in acquiring property in the UK and Europe.
Reo, which is 57 per cent owned by Treasury Holdings, the property group run by Johnny Ronan and Richard Barrett, has property assets valued at more than €850 million.
The commercial mortgage-backed bond will be secured against 16 retail and office properties, worth some €500 million. They include the Stillorgan Shopping centre, the Bank of Ireland office on Mespil Road,Dublin and KPMG's office in Russell Court, Dublin along with 12 other properties in Dublin as well as the Marks & Spencer building in Cork.
Mr Leech said Reo had to overcome a number of tax and legal hurdles to create a suitable structure, paving the way for firms with similar portfolios to do the same. He noted it could provide a template for the banks, for instance, to securitise their commercial property loan portfolios.
Meetings with investors about the new commercial mortgage-backed bonds will run from Wednesday until January 25th with Morgan Stanley handling the deal.
