Deutsche Bank has issued initial pricing guidance for DECO 2015 Charlemagne, a €316m CMBS of three loans secured on 37 office, industrial and retail properties in the Netherlands, Belgium and Germany.
The CMBS is a securitisation of Deutsche Bank’s Windmill, MStar and Pegasus loans, made between September 2014 and April 2015, on assets with a total value of €493m, reflecting a loan-to-value of 64.2%.
The CMBS notes have a maturity of April 2020 with legal final maturity in April 2025. Deutsche Bank will provide a €22.5m reserve facility, which is available to pay interest on the notes
The new issuance, with expected Standard & Poor’s and DBRS ratings, is composed of five tranches as follows:
Class A: €188.25m – AAA/AAA at 38.2% LTV – 140bps over 3m Euribor
Class B: €46.75m – AA/AA (l) at 47.7% LTV – 175bps over 3m Euribor
Class C: €30.00m – A+/A(l) at 53.8% LTV – 220bps over 3m Euribor
Class D: €39.00m – BBB+/BBB(l) at 61.7% LTV – 280bps over 3m Euribor
Class E: €12.09m – BBB-/BB at 64.1% LTV – 380bps over 3m Euribor
The Windmill loan has a current balance of €177.2m and is a refinancing of the Windmolen loan in Deutsche Bank’s DECO 2014 Tulip CMBS. The Tulip CMBS repaid earlier this year.
The original €125.5m Windmolen loan, made to Czech firm PPf Real Estate, is now secured by 10 properties in the Netherlands: six office buildings, two office buildings with small retail elements, one office building with a hotel and one out-of-town shopping centre.
The MStar refinancing loan has a current balance of €83.7m and is secured on 19 light industrial properties in Germany and the Netherlands. The assets are owned by the M7 Real Estate and Starwood Capital joint venture, MStar Europe.
The Pegasus acquisition loan has a current balance of €55.3m and is secured on eight properties that comprise Pegasus business park near Brussels, Belgium. The business park, valued at €90m, is owned by Ares Management.
In its presale note, Standard & Poor’s said the loans were ‘reasonably leveraged’ at 64% loan-to-value. However, certain assets have high vacancy levels in an oversupplied market with a risk of further vacancy during the loan term, ‘thereby reducing the portfolio income and increasing default risk’.
DECO 2015 Charlemagne’s blended margin on the underlying loans is 278 bps. The transaction is expected to close by the end of July.