Deutsche Bank prices £380m successive Chiswick Park CMBS

Deutsche Bank closed a second successive CMBS secured by Blackstone’s Chiswick Park in an atypical unrated securitisation, with all three classes pricing below the £380m senior loan originated just one month ago.

Handelsraum Deutsche BankThe £380m unrated DECO 2013-CSPK CMBS priced as follows:

  • Class As: £269.8m at 155 bps over three-month LIBOR
  • Class Bs: £64.6m at 211 bps over three-month LIBOR
  • Class Cs: £45.6m at 240 bps over three-month LIBOR

The weighted average coupon for the £380m CMBS is 174.72 bps, meaning all three classes came inside the 250 basis points at which Deutsche Bank underwrote the loan to Blackstone one month ago, implying a profitable securitisation for the global investment bank.

The senior LTV of the CMBS loan, which has a maturity of three years with a one-year extension option, is 53.5%,  which implies the carrying net valuation of Chiswick Park by Blackstone is £712.9m, while the gross valuation, including stamp duty and rental top ups, is £783m.

CoStar News understands the two major accounts for DECO 2013-CSPK CMBS, including JPMorgan as the largest investor.

Underneath the CMBS is a £200m mezzanine loan which is a separate account of Qatari Investment Authority (QIA) capital managed by Apollo Global Management, CoStar News understands.

Inclusive of the QIA mezzanine loan, the £580m “cash-out” refinancing, based on the £712.9m net valuation, reflects a whole loan LTV of 81.35%.

The notable absence of any ratings by Deutsche Bank is thought to reflect the cost of liquidity facilities, in a market for which there are few current providers, the bank’s appetite for a swift execution and its assessment of the probability of a successful close of unrated paper.

With the Chiswick Park CMBS only returning to a fresh issuance two years after Deutsche Bank’s 2011 European securitisation market re-opening deal, the confidence in the performance of the paper by the returning accounts and newcomer in JPMorgan was deemed sufficiently high to enable a successful closing.

Deutsche Bank will also book a higher profit on DECO 2013-CSPK CMBS after not incurring costs of the required two rating agencies and the liquidity facility, as well as additional legal fees in assessing both contracts, while reducing the possibility of worsening market conditions in the extended period.

The prospectus is expected to be published in the coming days.

Bondholders in the previous securitisation were repaid on the 22 May interest payment date.

Blackstone brought Chiswick Park to market last autumn with a £800m price tag, but was unable to secure sufficient interest from the target sell-on investors – sovereign wealth funds – which is thought to be due, at least in part, to the unfinished speculative development for the office campus estate’s ‘Building 7’.

Blackstone’s £480m paid for Chiswick Park in March 2011, plus the circa £45m in development costs for Building 6, takes the all in cost of the West London complex to £525m. The £580m refinancing enables Blackstone to bank £55m of profit following this refinancing.

Blackstone’s target now is to complete the speculative development of ‘Building 7’, including all leasing, and seek to sell a completed Chiswick Park in less than two years’ time.

Deutsche Bank declined to comment.

About CoStar News

Finance Editor, CoStar News
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