Varde Partners has issued a CMBS to refinance a portfolio of secondary UK properties, and sold the bonds to Credit Suisse.
Credit Suisse bought the notes in the new £185 million Magni Finance Designated Activity Company which is understood to have been issued on 31 December 2015.
The loan securitised in the agency deal refinanced Varde’s January 2015 purchase of the mixed-use Titan portfolio from Aviva Commercial Finance which was financed with a loan by the Swiss bank. The securitised loan also financed Varde’s acquisition last November of Royal London Asset Management’s Peacock and Toucan portfolios of 14 high street shops, collectively known as the Pecan portfolio.
Varde bought the Titan portfolio for £250 million and working with asset manager APAM has subsequently sold on several assets. In total, including the properties acquired through the Pecan deal, the securitised loan is backed by 172 mainly office and retail properties, valued at £263.7 million in September 2015.
The CMBS has been rated by Fitch and DBRS and comprises four tranches. There is also a total of £18.5 million of junior debt that sits beneath the CMBS notes.
According to the deal’s offering circular. “The notes (including the junior notes which will be retained by the retention holder) will be acquired by one or more of the funds advised by Varde Partners and are expected to be subject to a repurchase transaction, to be concluded with Credit Suisse AG, London Branch on or following the closing date, for so long as the notes are held by Varde funds.”
The deal was described by one CMBS market observer as a quasi-retained private transaction. Credit Suisse could market the notes, although given the current state of limbo in the European CMBS market, it is unclear as to when the bank might attempt to sell its exposure on.
Credit Suisse, was a key player in the pre-crisis European CMBS market, but has not issued a securitisation since the crash. Late last year head of commercial real estate finance Derek Rich left the bank after a year in post. The bank announced plans to cut around 6,000 jobs last October.
Credit Suisse declined to comment.