BAML issues initial pricing guidance for Italian private equity CMBS

Bank of America Merrill Lynch (BAML) has issued initial pricing guidance on its first European commercial real estate securitisation of the year – the private equity sponsored €286.425m Taurus 2015–1 IT.

Screen Shot 2015-01-26 at 22.15.15The transaction is the securitisation of three commercial real estate loans – one each to Orion, Blackstone and Cerberus – together totalling €301.5m, with €15.07m retained by BAML to comply with retention requirements.

The are 14 properties in Taurus 2015–1 IT together valued at €482.0m, which deliver a gross passing annual rent of €40.5m. The vacancy rate across the entire three commercial mortgage loans is 12.5%, while the weighted average gross yield is 8.5%.

CLASS    SIZE    EXP.RATINGS       LTV         IPT  

  • A    €206.0m    [A+/A+]                 45.0%      3mE+140a 
  • B    €23.0m       [A/A]                      50.0%      3mE+180a  
  • C    €34.25m     [BBB/BBB(L)]      57.5%     3mE+250a 
  • D    €23.175m   [BB/BB(L)]           62.6%      3mE+380a 

Fitch Ratings and DBRS are rating Taurus 2015–1 IT. The master servicer, Zenith, has delegated primary and special servicing roles to Mount Street Mortgage Servicing.  BAML has provided a €19m liquidity facility.

Last Thursday the European Central Bank announced its much-anticipated bond-buying programme, to the tune of €60bn per month for at least 18 months from March.

While the EU-style Quantitative Easing is not expected to include much direct purchasing of CMBS notes, the ECB’s action is expected to force investors up the risk-curve.  

In turn this could see capital  redeployed into the ABS sector, triggering a new global hunt for yield resulting from falling investment grade sovereign and corporate bond yields. 

The first of the three loans in the Taurus 2015–1 IT CMBS is the Globe Loan, a five-year and three-month €115.0m senior loan to Orion Capital Managers.

The loan is secured by three shopping centres located in Northeastern Italy: the 46,163 sq m Vicenza; the 29,906 sq m Monfalcone; and the 35,288 sq m Fiume Veneto.

BAML priced the loan at 230 basis points over three-month Euribor and funded the facility on 18 November 2014. 

CBRE valued the three shopping centres, owned by Orion through Orion European Real Estate Fund IV in separate SPV, at €198.77m on 30 September 2014, reflecting a 57.9% LTV. 

The gross passing annual rent across 194 tenants is €15.1m, while the unexpired lease term is 7.7 years and 5.1 years to first break.

The second loan is the Fashion District Loan, a five-year €85m senior loan to an Italian closed-ended real estate fund, Moma, wholly-owned by Blackstone Real Estate Partners (BREP) and secured by two retail outlet villages in Mantova and Molfettta.

The BREP funds used about €45m for the acquisition of the two properties, the 25,065 sq m Mantova Fashion District and the 37,916 sq m Molfetta Fashion District.

BAML priced the loan at 270 basis points over three-month Euribor and funded the facility on 27 November 2014.

Cushman & Wakefield valued the two retail outlet villages at €130.9m on 30 September 2014, reflecting a 64.9% LTV.  The gross passing annual rent across 187 tenants is €12.1m, while the unexpired lease term is 5.0 years and 3.9 years to first break.

The third CMBS loan is the Calvino Loan, a four-year €101.5m senior loan, with a one-year extension option, to C2 Investment Fund, an Italian closed-ended opportunistic real estate fund wholly-owned by Cerberus.  Cordea Savills is the asset manager.

Cerberus’ Calvino Loan is secured by a portfolio of five office properties and four telecom assets – off of which are located in Northern Italy except for one in Rome.

BAML priced the loan at 325 basis points over three-month Euribor and funded the facility on 31 July 2014.

Jones Lang LaSalle valued the nine-strong portfolio at €152.3m on 26 June 2014, reflecting a 66.6% LTV.  The portfolio was 80.5% occupied as of 30 September 2014.  The gross passing annual rent across 28 tenants is €13.4m, while the unexpired lease term is 8.3 years and 4.1 years to first break.

Last week, Banca IMI priced the first European CMBS of the year, the €203m securitisation of a loan secured by a single retail property, Monte Napoleone in central Milan, Italy, owned by Giuseppe Statuto.  

The property was valued at €314.7m on 1 July, 2014.

The transaction – arranged by Banca IMI and Cairn Capital – is called Tibet CMBS S.r.l.  The loan was originated at 400 basis points over three-month Euribor while the blended coupon priced at circa 270 bps.

jawallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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