Deutsche Bank and Credit Agricole relaunch Westfield Stratford £750m CMBS-like deal

Deutsche Bank and Credit Agricole CIB have relaunched the £750m Westfield Stratford City commercial mortgage-backed floating rate note transaction this morning, eight weeks after the deal was pulled over CRD retention rule concerns and a lack of demand during the peak summer period.

Credit AgricoleAfter further legal advice, joint arrangers of the STRAT 2014 transaction, Deutsche Bank and Credit Agricole, have concluded that “the transaction is not a ‘securitization’ for the purposes of Article 405 of the CRR and Article 17 of the AIFMD.” 

Furthermore, the two investment banks have clarified with prospective note buyers that the decision to omit a 5% retention stake in the capital structure is regulatory sound.

STRAT 2014 is a single-tranche, investment grade agency-style securitisation of a £750m senior loan backed by the Westfield Stratford City shopping centre.

Part of the reason why Deutsche Bank and Credit Agricole CIB proposed no retention rule for the Westfield Stratford City Finance PLC CMBS – for either the banks or the sponsors – is that the agency transaction only has one tranche of bonds. 

From a regulatory perspective STRAT 2014 is not a CMBS, although the transaction shares many structural similarities which concerned some investors of the possible penal regulatory capital charges which could be levied on investors if the transaction was subsequently deemed to have required a 5% retention.

The second difficulty was simply timing, the peak summer period prevented the deal’s closure.  

Back on 6 August, prior to the transactions shelving, Deutsche Bank and Credit Agricole CIB offered initial pricing:

  • ·         Class A:  AAA(sf)/ AAA(sf),  £750m, 38.4% LTV @ 87-90bps over 3mL.

No official pricing guidance has yet been issued but it is now expected that Deutsche Bank and Credit Agricole could beat that initial pricing target.

The ‘red’ offering circular is expected to be released today, followed by the release of presale reports from Fitch Ratings and DRBS shortly.  Roadshows take place this Thursday and Friday, with the deal expected to price by early-to-mid next week.

Capita Asset Services is primary and special servicer.

The single STRAT 2014 loan refinances the existing £550m senior loan financing syndicate, jointly led by Eurohypo, HSBC and CA CIB in August 2011, in a process dubbed Project Agora.

The 1.9m sq ft Westfield Stratford City shopping centre, Europe’s largest urban shopping and leisure destination and valued at £1.95bn by CBRE in May 2014, is 50% owned by Westfield Corporation and 25% owned each by Canada Pension Plan Investment Board (CPPIB) and Dutch pension fund Algemene Pensioen Groep (APG.

The timing of the re-launch of STRAT 2014 follows the closure of Deutsche Bank’s traditional true sale €250.04m DECO 2014 Tulip CMBS last night.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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