Banks to securitise another €1.1b of Blackstone and Brookfield assets

Two more CMBS transactions have been launched in the last week, taking the number so far this year to nine.

Morgan Stanley has launched Viridis (European Loan Conduit No. 38) DAC, a £150 mln securitisation of the majority of a three-year, £192 mln senior loan which the US bank  secured on Aldgate Tower, in the City of London.

The borrowers, Brookfield Property Partners and China Life Insurance Company, are refinancing the 324,000 sq ft office tower at 2 Leman Street. The senior loan was advanced at Sonia (Sterling Overnight Index Average) plus 2.85%.

Aldgate Tower was completed in November 2014 and subsequently fully multi-let before Brookfield and China Life bought it for £346 mln in 2016. Brookfield has a 10% equity stake but more control than the size of its stake would imply.

The tower’s value has fallen slightly to £330 mln according to an April 2021 valuation by Savills, reflecting the fact it is a quarter vacant. WeWork recently vacated the building after surrendering its lease on three floors in March and the property was 72% occupied at the time of the valuation. Since then, as expected Maersk exercised its break option in May, reducing occupation to 68.4%.

DBRS Morningstar, which is one of the agencies rating the five-tranche deal, said it had given: ‘credit to the sponsor’s business plan, recognising Brookfield’s experience as a commercial real estate manager and the high historical occupancy of the building until recently'.

In the second deal, Goldman Sachs and Barclays plan to launch Last Mile Logistics Pan Euro Finance, a six-tranche securitisation of a €510.2 mln senior loan made to Blackstone’s Mileway.

The loan is backed by 113 predominately light industrial or logistics assets across seven European countries and was accumulated through four portfolio acquisitions and one single-asset acquisition by Blackstone in the past 18 months.

JLL valued the portfolio last month at €801.4 mln, including a 5% portfolio premium. Almost 30% of the properties are in Germany with almost 21% in France and 17.5% in the Netherlands. There are also assets in Ireland and two in Denmark.

According to DBRS, Mileway also plans to borrow €102 mln of mezzanine debt against the portfolio, taking the total loan to value on the assets to 76.4%.

This CMBS is the second for Mileway this year: in March, Morgan Stanley sold Last Mile Securities, a €373.4 mln securitisation of a loan, secured on 49 Blackstone-Mileway properties valued at €600 mln in the Netherlands and Germany.

Elsewhere in the European CMBS market, the £211.2 mln Agora Securities CMBS of nine UK retail parks owned by Brookfield, has priced. Bank of America and Morgan Stanley's final terms were: Sonia + 120 basis points for the €136.3 mln of A notes, rated AAA (31.8% LTV); Sonia + 155 bps for the €33 mln of B notes (40.1%); Sonia + 190 bps for the €31.8 mln of C notes; and Sonia + 280 bps for the €9.7 mln of D notes.

The nine CMBS transactions take the amount securitised or to be securitised in the European debt capital markets in the first half of this year to approaching €3 bn, meaning 2021 is set to see a much healthier volume than last year.


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