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Thursday, 13th August 2020
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First CMBS deal for Ireland Back  
Real Estate Opportunities Limited (REO), a Treasury Holdings group property investment company, has transacted Ireland’s first commercial mortgage backed securitisation (CMBS) to be entirely secured by Irish real estate assets. The loan will be used to replace existing borrowings, driving down costs while also freeing up cash.

Ray Horney, chairman of REO, said, ‘The deal will allow REO to pursue further expansion opportunities in the real estate markets in Ireland and elsewhere’.

Opera Finance (CMH) plc will issue €375 million CMBS floating-rate notes, in a deal which was advised by European property bank, Eurohypo, its tenth transaction in the Opera series. Morgan Stanley will act as bookrunner on the issue. The deal is to be secured against 16 retail and office properties (15 in Dublin and one in Cork), including the Stillorgan Shopping Centre, and the Marks & Spencer building in Merchant’s Quay in Cork.

According to a pre-sale report by Standard & Poor’s, (S&P) offices account for approximately 62 per cent of the portfolio by value, and 63 per cent by passing rent. Proposals to refurbish and extend Stillorgan Shopping Centre, the largest asset in the pool, are currently at the planning appeal stage. If approved, this asset could be refinanced, which would mean that if no further changes or substitutions were made, over 90 per cent of the pool would be central Dublin offices.

The five most important tenants in the portfolio, according to S&P are Bank of Ireland Asset Management’s office on Mespil Road, KPMG’s office in Russell Court, FAS Ireland on Baggot Street, Mason Hayes & Curran’s office on Barrow Street, and the aforementioned M&S building.

S&P say that the strengths of the deal are the fact that the 16 properties are in relatively strong locations in Dublin and Cork, and that less than 20 per cent of total income is scheduled to expire during the loan’s seven-year term, and less than a quarter of this relates to office income.

However, the rating agency is concerned that there is minimal geographic diversity, and the fact that the portfolio carries an inherent capital gains tax liability of approximately €52 million.

REO is a property investment company with property assets of over €850 million, and is listed on the London, Irish and Channel Islands Stock Exchanges.

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