BAML reveals Italian CMBS pricing

Bank of America Merill Lynch has issued initial price guidance on its €286.4m CMBS – Taurus 2015-IT.

Bank of America Merill Lynch has issued initial price guidance on its €286.4m CMBS – Taurus 2015-IT.

The deal’s A tranche is guided at 140bps over three month Euribor. This is 8bps lower than Goldman Sach’s MODA deal and 5bps below Deutsche Bank’s DECO-2014 deal, both Italian CMBS issued last summer. The tighter pricing in-part reflects the improvement in the European financing market since then as well as heightened interest in the Italian real estate market.

BAML logoThe five-year deal is rated by Fitch Ratings and DBRS. BAML will retain at least 5% in each class of notes.

The pricing guidance is as follows:

Tranche Size (€) Expected rating LTV (%) Pricing guidance (Three month Euribor plus bps)
A 206 A+ 17.4 140
B 23 A/A 15.6 180
C 34.25 BBB 13.6 250
D 23.175 BBB 11.9 380

Retail centres owned by Blackstone and Orion Capital Managers and offices in the hands of Cerberus Capital Management make up the collateral. All three investors were early into the recovering Italian real estate market.

Last year there were 12 European deals which raised just over €4bn of finance and the market is predicting an uptick to around €8bn this year. It is thought that BAML may also be preparing a new CMBS of its €470m loan to refinance IVG’s The Square in Frankfurt completed earlier this month, Deutsche Bank a CMBS with Irish collateral and Citi a pan-European logistics deal.

Secured against 14 office and retail assets owned by the three sponsors, the Taurus loans have an average LTV of 62.5%, valuing the portfolio at €452.24m. The average occupancy is 87.8% with an average unexpired lease length of 3.9 years.

It follows on from Banca IMI and Cairn Capital’s €203.1m Italian deal – Tibet CMBS SRL – last week. It was secured against No 12, Via Montenapoleone, a prime retail asset in Milan. The €105m Class A tranche priced at 165bps over Euribor.