Deutsche Bank and Credit Agricole CIB issued pricing guidance on Friday for its re-launched £750m commercial mortgage floating rate bond, STRAT 2014, at between 85 and 90 basis points for the single-tranche investment grade issuance.
Westfield Stratford City was valued at £1.95bn in May by CBRE, reflecting at 38.4% LTV. The shopping centre has a current annual net operating income of £92.8m and a 98.9% occupancy.
The pricing guidance, if achieved, would represent a marginal improvement on the initial pricing guidance of 87 to 90 bps offered back on 6 August, at the first time of offering.
However, Deutsche Bank has a recent track record of beating its initial pricing guidance – including with last week’s DECO 2014 Tulip – and expectations are that STRAT 2014 could in fact settle sub 80 bps.
Of course, the agency securitisation is very lowly-geared and has limited use as comparable for current loan pricing – securitisation or bilateral, beyond that of a sub 40% LTV super prime London possibly trophy asset.
The metric which will be keenly followed is the over subscription ratio, that is, how much more than £750m could Deutsche Bank and Credit Agricole CIB have sold at the pricing achieved.
This figure offers an insight into the depth of the investment market for AAA-grade commercial mortgage bonds.
Next up in the CMBS line for Deutsche Bank following STRAT 2014 is the possible securitisation of a €750m loan which refinanced IVG Immobilien with a €1.5bn new facility, according to market sources including Debtwire who first broke the story.