Europe sees first publicly offered CMBS since credit crunch

Hope for the revival of Europe’s CMBS market as Deutsche Bank places ‘DECO 2011-CSPK’ backed by a £302m loan made to The Blackstone Group to buy Chiswick Park in London. GIC is also revealed as the mezzanine lender to Blackstone for its deal.

A milestone was reached yesterday in European real estate as Deutsche Bank successfully placed what is being described as the first publicly offered commercial mortgage backed securitisation since the credit crunch.

The London office of the German bank completed DECO 2011-CSPK CMBS, which is backed by a £302 million (€334 million; $484 million) loan made to The Blackstone Group that the private equity firm used to acquire Chiswick Park to the west of Central London for £480 million.

The transaction is the first CMBS that has been placed into the market in Europe since 2007 and has been closely monitored by market participants as it is generally considered to represent the re-launch of the CMBS market in Europe implementing the CMBS 2.0 principles – the new best-practice market guidelines.

Blackstone's acquisition was also funded in part by a £60 million mezzanine loan funded by GIC, Singapore's sovereign wealth fund.

Charles Roberts, a partner at law firm Paul, Hastings, Janofsky & Walker, which advised Deutsche Bank, said: “This is a landmark transaction for the European CMBS market. Hopefully, this transaction will lead the way to the recovery of the CMBS market in Europe. The success of this transaction indicates that the CMBS market has the ability to re-emerge as a significant source of debt capital for the European commercial real estate market.”

The deal comprises three publicly offered tranches. There is a £235 million tranche which has been rated AAA with a coupon of 1.75 per cent over LIBOR, and there are two higher loan-to-value tranches of £30 million, rated AA with a coupon of 2.75 per cent over LIBOR, and £37 million, rated A-/A tranche with a coupon of 3.75 per cent over LIBOR.