GI Partners acquire €214 million of first lien non-conforming residential mortgages

GI Partners, a leading trans-Atlantic private equity firm focused on investments in real estate and other asset-intensive businesses in Western Europe and North America, in partnership with Principal Company, a Dutch independent asset-based investment and advisory firm, Friday announced the acquisition of €214 million (face value) of first lien, non-conforming residential mortgages whose underlying collateral assets are in the Netherlands.

According to GI Partners, the improvement in the Dutch unemployment rate, which is a key driver of borrower defaults, and other positive economic indicators, make it an opportune time to invest in the Dutch residential housing market. The transaction was funded by capital from GI Partners Fund III L.P. and Principal Company, as well as mortgage-backed debt provided by Natixis. Simultaneously upon the closing, a special purpose vehicle issued €103.8 million of mortgage-backed securities provided by Natixis.

Phil Kaziewicz, GI Partners’ Managing Director said the transaction will generate an excellent risk-adjusted return for the firm’s investors, including an attractive annual cash yield. Kaziewicz further reiterated that GI Partners hopes 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. GI is also pleased to have underwritten, structured and purchased these assets with a partner such as Principal Company, said Kaziewicz.

According to Kaziewicz, the 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 the firm to leverage its domain expertise within the financial services sector, he said.

Kornelis Lammerts, Managing Director of Principal Company, commented that working together with the GI Partners team, Principal identified this seasoned pool of residential mortgages and were able to acquire it at an attractive purchase price. Principal is currently evaluating a number of other similar investment opportunities in the Benelux region with GI Partners.

With offices in London, Munich, Menlo Park (California), Greenwich (Connecticut) and Chicago, GI Partners focuses on control oriented investments in real estate and other asset-intensive middle market businesses located in Western Europe and North America. Key sectors of focus include commercial real estate, facilities-based healthcare services, financial services, leisure and mission-critical IT infrastructure/services.
 
GI is currently investing through GI Partners Fund III L.P. (Fund III) which has $1.9 billion of capital commitments from leading institutional investors and is approximately 65% invested.

18th March 2011

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