BNP Paribas has privately placed the two tranche, unrated €85m floating rate Italian retail CMBS, dubbed Lusso Srl, at par with a mix of Asian and UK investors.
Lusso Srl is secured by Sicilia Outlet Village, a luxury retail outlet located in Sicily, Italy and valued at €139.7m by CBRE in mid-March, reflecting an LTV of 60.8%.
The Sicilia Outlet Village, comprised of 142 retail units over 29,600 sqm with an occupancy rate over 90%, is owned by Stilo, the real estate arm of Percassi, through its subsidiary Arcus Real Estate. The Sicilia Outlet Village was opened in two phases, 2010 and 2014.
BNP Paribas refinanced Stilo’s existing debt with a €85m whole loan priced at 400 basis points over three-month Euribor, which was then split into two tranches carrying the following coupons:
CLASS €m LTV (%) COUPON
A 65.0 46.5 320
B 20.0 60.8 600
The blended coupon on Lusso Srl was 386 bps, implying an excess spreads of 14 bps which is likely sufficient to cover set up costs, particularly given the transaction is unrated so incur no rating agency fees or liquidity facility costs.
The unrated notes would incur a high capital charge for banks and insurance companies, while unregulated hedge funds and debt funds would not.
At €139.7m, Sicilia Outlet Village’s net initial yield is 7.59%. The gross passing rent was €9.9m as at March 2015.
Fabrice Susini, global head of securitisation, BNP Paribas said in a statement: “Despite its size, we considered a securitisation from inception in order to optimize the profile and benefits for the client, whilst providing investors with an attractive product. And we have been delighted by the reception we received.
“The ability to underwrite and hold the loan during the securitisation phase was crucial in providing our client with the most suitable debt solution.”
Percassi specialises in the development and management of shopping malls and outlet centres in Italy and is currently building the largest mall in Milan in a joint venture with Westfield, the Westfield Milan.
Mount Street Mortgage Servicing, which is responsible for more than £12bn of commercial real estate debt throughout Europe, will act as a primary and special servicer.
In March 2014, BNP Paribas privately placed the €135m Reni CMBS, which was the securitisation of a loan backed by four shopping centres and four Ipercoop hypermarkets located in the Emilia Romagna, Lazio and Sicily regions of Italy. The single-tranche deal priced at par with an annual coupon of 5.2%.