Bank of America Merrill Lynch (BAML) has released initial price thoughts (IPTs) for its latest European CMBS – Taurus 2016-2 DEU – with the AAA notes indicatively priced at 120-130 basis points over three-month Euribor.
The €229.935 million deal is the securitisation of a single loan backed by a German property portfolio. The deal is the second German CMBS to be marketed by BAML this year, and would be Europe’s second public CMBS of 2016.
The underlying loan was provided by BAML to Canada’s Dream Global REIT to finance a portfolio of mainly German offices including properties leased to Deutsche Post and Deutsche Postbank. The underlying portfolio has been valued at €493.1 million.
Indicative pricing across the six tranches is as follows:
- Class A (€140.1 million, 29.9 percent LTV): 120-130 basis points over three month Euribor.
- Class B (€37 million, 37.8 percent LTV): low 200s bps.
- Class C (€27.2 million, 43.6 percent LTV): Around 300 bps.
- Class D (€25.635 million, 49.1 percent LTV): Around 400 bps.
Launch and pricing is expected this week.
The sponsor, Dream Global REIT, is an open-ended real estate investment trust which is invested in Germany and Austria and is a subsidiary of Toronto-based Dream Office REIT, formerly known as Dundee REIT. Last December, Dream Global REIT announced that it had agreed a €244.1 million five-year loan with BAML at a margin of 225 basis points over three-month LIBOR to refinance its initial properties in the German market.
Taurus 2016-2 DEU has an expected maturity date of January 2021 and a 72 month tail period, with legal final maturity in January 2027. The deal will be listed on the Irish Stock Exchange.
BAML previously sold the first CMBS of 2016, the €317.05 million Taurus 2016-1 DEU, in March. That deal was the securitisation of a €335 million senior loan which financed Blackstone’s €470 million purchase of the Kingfisher portfolio of mainly German retail properties from Stenham Property last May.
The Taurus 2016-1 DEU AAA notes priced tighter than the bank’s initial price thoughts, with the €141.6 million Class A selling at 130 bps, tighter than the indicative 140-150 bps. The Class E notes sold at a 5 percent discount and the Class F tranche sold at a 6.8 percent discount.
Other lenders said that the 130 bps pricing was an encouraging sign for the European CMBS market which had been at a virtual stand-still since last autumn. Last September, AAA tranche pricing had widened to 165 bps, from as low as 90 bps during the second quarter of 2015.