Metro Bank Plc agreed to acquire a portfolio of U.K. mortgages from Netherlands-based CERH RSMC Sub BV and Capital Home Loans Ltd. for a consideration of £523 million.
The portfolio, which is being acquired at a discount to par, consists of variable rate buy-to-let mortgages, 98% of which are linked to the Bank of England base rate. The portfolio has a weighted average seasoning of about 13 years and a weighted average loan-to-value of less than 50%.
The expected pay rate on the portfolio is about 1.9%, but the expected yield will be greater than 1.9% when the discount to par is applied. The consideration, which is being financed from the bank's existing resources, reflects the value at which the mortgages will be taken on to Metro Bank's balance sheet, the lender said.
Metro Bank noted that all lending in the portfolio is secured on property and has a similar credit risk profile to the bank's current mortgage book. The transaction is expected to complete March 1.