Goldman Sachs launches Apollo-sponsored €182m Italian CMBS

Goldman Sachs has today launched the securitisation of a €181.95m loan extended to an Apollo Global Management-backed fund, managed by AXA Real Estate, which financed the €290m acquisition of a 25-strong mixed-use Italian portfolio with a weighting towards retail and entertainment assets.

Goldman-SachsThe capital structure for the five-year Italian CMBS is as follows:

Class Size       LTV                WAL

  • A:        €109.3m        39.4%            4.37yr
  • X1:      €0.2m
  • B:        €33.3m          51.4%              4.49yr
  • C:        €12.4m           55.8%             4.49yr
  • D:        €17.7m           62.2%             4.49Y
  • E:        €9.249m        65.5%              4.49Y
  • Total: €181.95m

Standard & Poor’s and Fitch Ratings are expected to rate the transaction, which is scheduled to mature in May 2020. The legal final maturity is seven years after, in May 2027.

Goldman extended a circa €191.5m five-year senior loan to an Italian-regulated real estate fund, which has Apollo European Principal Finance Fund II and AXA Real Estate Investment Managers as its two investors.

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

According to Bloomberg, the joint venture fund is 99% Apollo capital and 1% AXA. In addition, AXA Real Estate Investment Managers SGR is manager of the fund.

The Apollo-led fund acquired the of 25 retail and leisure assets from Olinda Fondo Shops, a listed real estate mutual fund managed by Prelios SGR, for a total consideration of c. €290m.

The property portfolio comprises four entertainment centres, five cash and carry stores, five large furniture retailers, three retail malls and seven street shops and other assets.

The portfolio has a total leasable area of c. 260,000 sqm, and is predominantly located in the Northern Italian provinces of Piedmont, Lombardy and Veneto. Over two-thirds of the portfolio is anchored by five leading global retail and leisure brands.

Major shopping and entertainment centres within the portfolio include:

  • Bicocca Village and Gate, one of Italy’s top performing entertainment centres spread across c. 40,000 sqm in Northern Milan. Anchored by an 18-screen cinema and a health club, the recently expanded complex hosts a selection of other retailers, supported by a multi-level car park with capacity for 1,350 cars.
  • The Moncalieri 45, a c. 34,000 sqm, open-structured shopping and entertainment centre, located just south of the northern city of Turin. This centre is also anchored by a multi-screen cinema and a health club, with the asset further benefitting from a double-level food court and parking for 1,750 cars.
  • The Grotte Centre, located within an established retail area in the town of Camerano, near Ancona, the c. 18,000 sqm centre opened in June 2013 and has drawn major tenants.
  • The UCI Pioltello, located in an eastern suburb of Milan, comprises a 14-screen multiplex cinema, in addition to two restaurants and two bars, totalling c. 16,000 sqm.

This latest Goldman-issued Italian CMBS is the sixth from the jurisdiction post crisis, all of which have been entirely or strongly weighted towards the country’s retail sector.  In total, all six deals amount to €1.4bn in the last 18 months.  

More broadly, new European CMBS issuance has picked up in recent weeks, including last week’s launch of the JPMorgan-issued refinancing of Blackstone’s reduced £632m three-strong Mint hotel portfolio.

The three-year Mint 2015 PLC transaction was structured in sterling and euro tranches, secured by two London hotels and one in Amsterdam, all rebranded Doubletree by Hilton.  For last week’s story, please click here.

Last December, JPMorgan refinanced Blackstone’s originally eight-strong portfolio with an additional circa £100m mezzanine loan which was also tranched in sterling and euros.

The £75.5m sterling tranche and €30.9m euro tranche each carried a 6% margin and was also securitised – in a transaction called Mint Mezzanine 2014 Limited – at the beginning of the year,  believed to have been privately placed with just one or two accounts who needed to hold the loan in bond form.  The mezzanine Mint CMBS matures on 26 February 2018.

Also last week, the €1.3bn Silverback Finance CMBS priced. Goldman Sachs was the arranger and joint lead manager with BNP Paribas and Banco Santander.

Silverback Finance is secured by 754 Santander branches in Spain, and is the first CMBS to have emerged in Spain post-crisis.

The dual tranche CMBS comprised:

  • Class A1: €867.9m, BBB+ rated, 10-year notes, priced at 225 bps over swaps;
  • Class A2: €476.9m, BBB+ rated, 17-year notes priced at 255 bps over swaps.

Pricing was established by adding a premium for perceived complexity, including lack of ECB eligibility of the bonds, on Santander’s own corporate debt.

Current rent is €108.1m and the portfolio was valued at approximately €1.8bn by CBRE in April 2015.

The deal is not considered a securitisation for regulatory purposes, owing to the lack of credit tranching, according to a CMBS research note published 1 June by BAML.

Uro Property Holdings SOCIMI S.A. (Uro) is the borrower. Uro purchased Banco Santander’s Spanish bank branch network in 2007 in one of the largest Spanish real estate transactions.

The Santander bank branch portfolio includes a geography weighting towards Madrid, which account for 35.8% of the portfolio by market value, followed by Cataluña, at 12.6%; Andalucia, at 9.3%; Castilla Y León, at 7.1%; and Galicia, at 5.77%. These five cities account for 70.5% of the portfolio’s value.

Following the closure of Silverback Finance, and assuming the closure of both Mint 2015 PLC and Goldman’s €182m Italian CMBS, this will bring total European CMBS issuance for the year to almost €3.3bn, well ahead of the pace from 2014, which saw just €887m issued in the first half of the year, according to BAML’s count.

There has, of course, been one failure: RBS’ attempted securitisation of £171.1m Antares 2015-1 transaction backed by a single loan from RBS to Kennedy Wilson containing 20 office, retail and mixed use properties in the UK (previously securitised in the Fordgate CMBS transaction, FOX 1).

“No reason was given for the postponement, although we believe the pricing levels that were likely to be achieved may have played a role,” wrote BAML’s Mark Nichol in a CMBS research note dated 27 April.

“We do not think the postponement of Antares is indicative of a negative change in market conditions…. rather, we think issues related to credit and structuring may have affected the pricing of Antares.

“We think this serves to illustrate the challenge in CMBS origination that each asset is unique and comparable pricing evidence is limited. Execution is challenging even in an environment of generally positive market conditions, in our view.”

About CoStar News

Finance Editor, CoStar News
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