Goldman Sachs sells €182m REITALY CMBS at discount

Goldman Sachs has priced its restructured €182.25m REITALY CMBS at a blended all-in margin of 317.4bps after discounting five of the six tranches.

REITALY, a securitisation of a single €191.5m loan to Apollo Global Management for a portfolio of 25 Italian retail assets, was relaunched last week after being delayed in June.

The six tranches, with Fitch and Standard & Poor’s ratings and maturity in May 2020,  priced as follows:

Class A1: €70m     A+/A at 25.2% LTV  Priced at 100% 215bps + 3m Euribor

Class A2: €39.3m A/A at 39.4% LTV                99.20%   255bps + 3m Euribor

Class B:   €33.3     BBB/BBB- at 51.4% LTV    98.65%   315bps + 3m Euribor

Class C:   €12.4     BBB-/BBB- at 55.8% LTV  99.50%   437bps + 3m Euribor

Class D:   €17.7m  BB/BB+ at 62.2% LTV       98.00%   470bps + 3m Euribor

Class E:   €9.25m  BB-/BB at 65.5% LTV        97.25%    545bps + 3m Euribor

Five of the six noteholder classes, A2-E, were sold at a discount, reflecting the difficulty Goldman has had seeing the deal off.

The US investment bank tried to launch the deal in June but delayed it before pricing. The bank declined to comment on the reason for the delay but fears in June surrounding the Greek crisis, the number of Italian CMBS deals already in the market, the poorer quality of some of the properties and the transaction’s initial guide pricing, have all been suggested.

It split the original Class A notes into two tranches and reassessed its pricing before bringing it back to market.

The blended overall margin is 298.7bps over Euribor, but investors which bought the deal will effectively receive 317.4bps after the discounted sales prices to par, Costar reported. The original loan was underwritten by Goldman Sachs at 331bps over Euribor.

REITALY is the seventh Italian CMBS to be launched post-crisis. It follows two others arranged by Goldman, in 2013 and 2014 (Gallerie 2013 and Moda 2014), one last year from Deutsche Bank (DECO 14 – Gondola) and three this year, from Banca IM/Cairn Capital, Bank of America Merrill Lynch and French bank BNP Paribas.

Goldman provided the original loan to Apollo’s Italian REITALY fund which is managed by AXA Real Estate Investment Managers and which bought the assets, originally for €290m of equity, from Olinda Fondo Shops, a listed fund managed by Prelios. The five-year loan is subject to a 20% amortisation target by 2018 and 30% by 2019, due to be met by asset sales.

The portfolio comprises five large retail assets, each with a cinema, five cash-and-carry properties, three retail galleries, five retail warehouse and seven shops. They are located across Italy and have a combined market value of €292.3m.

Goldman also priced the three subordinated tranches of its £646m Logistics UK 2015 deal below par last month in order to sell them into the capital markets.