Deutsche Bank is selling €355 mln of commercial mortgage-backed securities in the financial group's first offering of notes backed by multiple loans in Europe since the financial crisis, PropertyEU has learned.

The Deco 2014 Gondola CMBS notes are backed by three loans linked to 18 properties in Northern Italy and one
in Rome, according to well-informed market sources. The assets provide a lettable area of 680,000 m2 with an occupancy rate of 94% and an average remaining lease term of four years. Logistics assets make up 40% of the package with offices and retail each accounting for a 30% share.

Deutsche Bank is understood to be looking to retain 5% of all note classes. According to those who track the market,thebondsareexpectedtobepricedwiderthanthepreviousItalianGallerieCMBSofferingcarriedout by Goldman Sachs in late 2013, largely due to the shorter lease terms on the assets.
The pricing for the three-tranche Gallerie securitisation was 225 bps over Euribor for the tranche of up to 43% LTV, 325 bps for the second tranche up to 51% LTV and 455 bps for the Class C notes of up to 58% LTV, representing a weighted average blended margin of 275 bps.

The placing is expected to be completed by end-July.

A FIRST FOR 2014

The deal – the first European CMBS issuance of 2014 - is an encouraging sign for the European securitisation market, which has been virtually dead since the credit crisis as investors focused on simpler structures and safer investment bets. The market has seen a gradual resurgence over the last two years, but so far it has exclusively involved loans on prime properties in the UK, Germany and, most recently, Italy.

‘This transaction is another big step forward for the re opening of the CMBS market,’ commented Francesca Galante, co-founder of First Growth Real Estate, a debt advisory and loan special servicing business focusing on Continental Europe only. ‘It is also interesting that this is the second Italian CMBS issuance in just a few months, which is evidence of increasing interest on the part of foreign institutional investors into Italian real estate.’

GALLERIE 2013

In late 2013, Goldman Sachs sold €363 mln of Italian CMBS, Gallerie 2013, at a weighted average coupon on the triple-tranche securitisation of 2.75%. Gallerie is the securitisation of a five-year senior loan by Goldman Sachs International, which priced at 525 basis points over three-month Euribor for a 60% LTV. The financing was used to fund Morgan Stanley’s acquisition of a portfolio of mainly secondary retail assets leased to Auchan with a 10-year average lease term.

According to those who track the market, the Gallerie junior tranches are currently trading at a 5% premium on the secondary markets.

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