BAML launches €445m ‘The Squaire’ CMBS (updated)

Bank of America Merrill Lynch has launched the €445m five-year TAURUS 2015-2 DEU CMBS, the securitisation of a loan secured by IVG Immobilien’s The Squaire at Frankfurt airport.

The capital structure is as follows:

                          Class Size       Exp. Ratings          LTV            WAL  

  • Class A           €153.0m         AAA/Aaa                    25.0%            4.4
  • Class B           €61.2m           AA/Aa2                       35.0%            4.8
  • Class C           €61.2m           A/A3                           45.0%            4.8
  • Class D           €55.7m           BBB/Baa3                  54.1%             4.8
  • Class E           €74.1m           BB-/Ba2                     66.2%            4.8
  • Class F           €39.8m          B/B2                            72.7%             4.8

Total:             €445.0m

The single loan in TAURUS 2015-2 DEU is €445.0m of the total €470m five-year term loan originated by BAML in late January to refinance IVG’s Squaire, which subsequently cancelled the troubled investor’s attempted sale trajectory.

The five-year loan is priced at 265 basis points over three-month Euribor. Initial pricing guidance is expected early next week with the deal likely to price at the end of next week of the beginning of the final week of April.

The difference between the original balance and the securitised loan is BAML’s 5% retention stake in loan format, less one amortisation payment. BAML has prepared the TAURUS 2015-2 DEU data for the European data warehouse to ensure the transaction is ECB collateral eligible. This is expected to be an ongoing protocol.

TAURUS 2015-2 DEU matures in January 2020 and has a legal final maturity of January 2026. Ratings are expected from Standard & Poor’s and Moody’s.

The property has an appraised value of €644m, according to CBRE, and is multi-used with office accounting for the majority of gross rental income (GRI). GRI split is: office 57%, hotel 34%, retail 3% and other 6%.

BAML will retain on an ongoing basis a material net economic interest of at least 5% of the underlying loan.

The Squaire, a joint project between IVG Immobilien AG and Fraport AG, comprises usable space of 144,785 sqm, containing offices, two hotels, a business and conference centre and an infrastructure tailored to working life, with restaurants, shops, doctors, fitness facilities, a crèche and services from hairdressing to cleaning.

The debt yield is 7.1%, current occupancy is 85.2%, gross rent is €40m and net operating income is €33.4m. According to CBRE, the property has a €4,514 value per sq m. WAULT to expiry 10.3yrs; WAULT to first break 9.5yrs.

IVG approached several potential international buyers last September. In December, three of them were given the opportunity to firm up and revise their initial offers, which were subsequently rejected by IVG.

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