Deutsche Bank prices Charlemagne and cleanses noteholders on Crescendo as Goldman salvages Logistics CMBS

Deutsche Bank priced the €316.1m DECO-2015 Charlemagne CMBS, the pan-European multi-borrower transaction, in a busy Friday afternoon in European commercial real estate securitisation.

While Deutsche Bank closed Charlemagne at a blended note coupon that was 218.2 bps over three-month Euribor, reflecting an excess spread of 59.8 bps excluding costs, Goldman Sachs closed its £646m Logistics UK 2015 plc CMBS, secured by a 42-strong UK logistics portfolio owned by Blackstone’s Logicor, pricing the junior notes below par.

Meanwhile, Deutsche Bank also cleansed noteholder knowledge of metrics surrounding its attempted refinancing of the Gallerie 2013-1 CMBS in a transaction dubbed Crescendo.

The five-year DECO-2015 Charlemagne transaction is secured by a portfolio of 37 offices, industrial properties and retail assets with a combined value of €492.2m, reflecting a portfolio LTV of 64.2%, seperately owned by PPF Real Estate Holding, MStar Europe and Ares Management.

Charlemagne was priced as follows:

CLASS      €m        S&P/DBRS        COUPON   
A               188.25  [AAA/AAA]          3m€+145bps 
B               46.75    [AA/AA(l)]            3m€+215bps 
C               30.00   [A+/A(l)]               3m€+290bps  
D               39.00   [BBB+/BBB(l)]    3m€+425bps  
E               12.09   [BBB-/BB]             3m€+525bps
Total   316.09

Based on a blended loan margin across the three underlying Charlemagne loans of 278 bps, as reported by CoStar News in mid July, the above pricing implies a blended coupon of 218.2 bps.

Standard & Poor’s and DBRS rated Charlemagne, which has an expected maturity in April 2020, with a five-year tail to legal final maturity in April 2025.

Situs Asset Management has been appointed primary and special servicer.

Also on Friday, Goldman Sachs priced its £646m Logistics UK 2015 plc CMBS on Friday, at a blended coupon of 209 bps, which reflect 5 bps higher than the original loan margin, as stated in the transaction’s pre-sale reports. The final pricing was as follows: 

CLASS      £m  Fitch/Moody’s PRICE     COUPON   

A      £312.55      [AAA/Aaa]   100.00   3mL+125 
B       £67.45       [AA/Aa2]      100.00   3mL+190 
C       £67.45       [A/A2]           100.00   3mL+250
D       £60.8        [BBB/Baa2]   99.54    3mL+300
E       £76.0         [BB-/Ba2]       98.42   3mL+340
F       £61.75        [B/B1]             96.02   3mL+360

Total £646.0m

CoStar News understands that Goldman agreed a deal with Blackstone, which owns the Logicor platform, to cut the upfront fees on the loan in exchange for an increase in the loan of 16bps to 220bps.

This margin step-up mitigated Goldman’s likely loss on selling the loan to noteholders, with the price reflecting 0.61% discount to par.

The 11bps excess spread is believed to have been sufficient to cover ongoing costs, including annual rating agency surveillance fee, special purpose vehicle fee, accounting fees and servicing fees but unlikely the one-off upfront fees such as rating agencies fees, most legal legals etc.
Meanwhile, Deutsche Bank cleansed noteholders of private knoweldge of market-senstive information around the investment bank’s attempt to refinance the 2013 Goldman Sachs Italian retail parks and shopping-backed securitisation, Gallerie.

The new CMBS, dubbed Crescendo, is backed by a seven-year €485m senior loan secured by a portfolio of 14 shopping centres and retail parks properties across Italy owned by the Krypton Fund, which is owned by affiliates of the Morgan Stanley Real Estate Fund VII and Gallerie Commerciali Italia (GCI).

The previous Gallerie CMB was the first post-crisis Italian CMBS. Cleansing noteholders on Friday allows existing holders in Gallerie to trade the bonds, if they wish, as well as opening up the deal to public markets, should Deutsche Bank seek to press ahead.

Deutsche Bank’s inability to close the deal off-market is thought to be partly driven by the hightened volatility in June and early July surrounding Greece.

The intended capital structure of the Crescendo transaction is as follows:

Class              €m               LTV Initial
A                   194.28             27.2%
B                    70.78              39.1%
C                    46.31               46.9%
D                    42.99              54.1%
E                    24.23               58.2%
F                    31.11                63.4%
G                   30.88               68.6%
H                   20.19               72.0%

The 14 properties are together valued at €626.3m, as per Savills’ valuation March 2015, and spread across Italy with circa 50% (by market value) in Southern Italy and circa 50% in Northern and Central Italy.

All parties declined to comment.

About CoStar News

Finance Editor, CoStar News
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