Private equity firm GI Partners has partnered with Dutch investment and advisory firm Principal Company to acquire a portfolio of non-conforming residential mortgages which are collateralised by assets in the Netherlands and have a face value of EUR 214 mln.

'Following an improvement in the Dutch unemployment rate, which is a key driver of borrower defaults, GI Partners believes it is an opportune time to invest in the Dutch residential housing market,' the company said. The transaction was funded by capital from GI Partners Fund III and Principal Company as well as mortgage-backed debt provided by Natixis.

Simultaneously upon the closing, a special purpose vehicle issued EUR 104 mln of mortgage-backed securities rated Aaa(sf) by Moody's Investors Service and arranged by Natixis.

'We are delighted to have acquired this portfolio which we believe will generate an excellent risk-adjusted return for our investors, including an attractive annual cash yield,' said GI Partners' managing director Phil Kaziewicz. 'We hope that 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.'

He added: 'This 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 us to leverage our domain expertise within the financial services sector.'

Kornelis Lammerts, managing director of Principal Company, said the companies 'are currently evaluating a number of other similar investment opportunities in the Benelux region'.