More London securitisation plan is ditched as estate sells to St Martins

Goldman Sachs’ €363m Gallerie Italian CMBS has been sold to a number of investors after being well received by the market. The transaction closed this month after pricing at the end of November at 225-235 basis points over three-month Euribor for the €271m of class A notes; 330bps for the €50m of class Bs; and 465bps for the €42m of Cs.

Gallerie is the securitisation of a five-year senior loan provided by Goldman Sachs International at a margin of 525bps, according to Costar. The loan financed Italian closed-ended real estate fund Krypton’s acquisition of 13 shopping centres, all trading next to Auchan hypermarkets, and two retail parks across Italy, valued at €624m.

Krypton is 51.6%-owned by Morgan Stanley Real Estate Fund VII; Auchan owns the balance through its Gallerie Commerciali Italiane (GCI) company. Société Générale made a €107m junior loan. “The CMBS market has only seen UK and German multi-family housing deals this year so it’s really encouraging; clearly if there’s investor appetite outside these jurisdictions it’s a positive thing,” an adviser on the deal said.

Gallerie 2013 includes class X notes, which rank equal to the class As unless the loan defaults or until maturity, when they are subordinated to all other notes. CBRE Loan Servicing was appointed servicer and special servicer. One CMBS deal that has failed to come to fruition is a proposed securitisation of the around 2m sq ft More London estate, near London Bridge, SE1, which had previously been securitised in Epic (More London).

Advised by Rothschilds, London Bridge Holdings, the asset’s Armenian owner, began work on a refinancing over the summer, receiving term sheets from Deutsche Bank, Goldman Sachs, JP Morgan and HSBC. But the company switched tack when St Martins – the property investment arm of the State of Kuwait, which owns swathes of adjoining property – made a reported £1.7bn offer. It is one of the largest ever commercial property sales.

London Bridge Holdings said it had started a process “to refinance More London, but when presented with a highly attractive offer which maximises the value of its ownership of More London, decided to capitalise on this opportunity”. London Bridge Holdings was also advised by Capital Real Estate Holdings, which was set up four years ago by former JLL City investment head Nigel Fox.