Bank of America Merrill Lynch sold its £211.5m Taurus CMBS UK 2014-1 yesterday to 15 investors, with the class A notes tightening to 140 basis points over three month Libor.
Europe’s second new CMBS this year to price and close was oversubscribed twice overall. Initial guidance had been 150 bps for the class As (up to 41% LTV); 260-275 bps for the Bs (56% LTV); and 375-400 bps for the Cs (65% LTV), respectively. The B class priced at 250 bps; the Cs at 360 bps.
The deal’s underlying collateral is a portfolio of 132 secondary assets rather than a large prime asset or assets. The sponsor, Apollo Global Investors, bought the properties earlier this year for around £400m from the receiver appointed by former lender, Aviva Commercial Finance.
Investor appetite for new CMBS bonds also saw Deutsche Bank’s €354.9m DECO-2014 Gondola transaction oversubscribed by four times across the book last week. Of Gondola’s five tranches, the class As and Bs were 3.5x and 4x oversubscribed; the rest were 5-7x oversubscribed by the time the book closed within a total of two and a half days. This pushed pricing to 145 bps for the class As (31.6% LTV); 175 bps for the class Bs (42.7%); 210 bps for the Cs (48.7%); 295 bps for the Ds (56.8%); and 370 bps for the Es (60.5%).
The bonds were sold to 27 investors, most of them asset managers and buy-and-hold long term investors. Some 17% comprised treasury or insurers. At 78%, most of the buyers came from the UK, with 10% from Continental Europe. Blackstone is the sponsor.
Banks say that a lack of supply and the search for yield means investors are looking for CMBS paper Europe-wide. Owing to Gondola’s “good sponsorship and assets, moderate leverage, and a lack of supply” Deutsche Bank said it got the deal away with pricing slightly tighter than expected.
Commenting on the investor interest, BAML’s head of EMEA real estate debt distribution, Gregory Clerc, said: “Generally for US banks it will open up a new distribution for loans that may have been considered as a hold position or earmarked for exit through syndication”.
Deutsche Bank will soon launch an agency deal backed by the Westfield Stratford regional shopping mall in east London, jointly with Crédit Agricole CIB. The bank is also working on a securitisation of Dutch assets. Meanwhile Goldman Sachs is working on a second Italian CMBS, also with Blackstone, called Moda.