BAML to launch CMBS backed by Canadian REIT’s German portfolio

Bank of America Merrill Lynch (BAML) is marketing its second German CMBS deal of the year, in what would also be just the second public CMBS issue in Europe so far in 2016.

The €229.935 million Taurus 2016-2 DEU is understood to be the securitisation of a single loan provided by BAML to Canada’s Dream Global REIT. The loan financed a German portfolio, including properties leased to Deutsche Post and Deutsche Postbank.

The 49.1 percent loan-to-value facility is mainly secured by offices located across Germany. The underlying portfolio has been valued at €493.1 million.

Dream Global REIT is an open-ended real estate investment trust which is invested in Germany and Austria. It 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 will have an expected maturity date of January 2021 and will be structured in four tranches:

• Class A: €140.1 million, expected to be rated AAA/Aaa by DBRS/Moody’s, reflects 29.9 percent LTV.
• Class B: €37 million, expected to be rated AA/Aa3 by DBRS/Moody’s, reflects 37.8 percent LTV.
• Class C: €27.4 million, expected to be rated A(low)/A3 by DBRS/Moody’s, reflects 43.6 percent LTV.
• Class D: €25.635 million, expected to be rated BBB(low)/Baa3 by DBRS/Moody’s, reflects 49.1 percent LTV.

The debt yield is 13.1 percent and the portfolio’s current occupancy is 80.9 percent. The portfolio is 26.3 percent under-rented, with gross rent at €37.8 million. The weighted average unexpired lease term to first break is 3.1 years.

BAML said that it will retain at least 5 percent of the underlying loan.

The European CMBS market has been largely quiet since last September. In February, BAML launched Europe’s first CMBS of 2016. The €317.05 million Taurus 2016-1 DEU was the securitisation of the senior loan which financed Blackstone’s €470 million purchase of the so-called Kingfisher portfolio of German properties from Stenham Property last May.