Morgan Stanley Dean Witter has won competitive tenders to acquire two Italian property loan portfolios with a face value of about $5bn. It will buy the loans at a fraction of their nominal value, and plans to securitise them in the next 12 months.
In the first deal, the bank fought off a rival joint bid from Goldman Sachs and JP Morgan to acquire $3.5bn of loans from Italian lender FonSpa; in the second deal, it won a tender to buy $1.5bn of loans from SanPaoloINI.
John Carrafiell, head of European real estate at Morgan Stanley, said: “These two deals represent a major chunk of the CMBS market in the next 12 months; there’s going to be a lot of paper coming out of Italy.”
Separately, Morgan Stanley has raised €400m through securitising a portfolio of non-performing property loans owned by the Italian Banco di Sicilia.
The issue was entirely rated AAA, the first time such a deal has been awarded the top rating on the entire issue.
The amount of debt raised represented less than 40% of the principal amount of the loans, explained Carrafiell. “The combination of interest payments and loan resolutions will comfortably cover the interest on the bonds,” he said.
The European commercial mortgage securitisation market is growing rapidly. According to Moody’s Investors Service, total CMBS issuance in Europe last year was €9.2bn, which was a 185% increase over the previous year. Moody’s expects the market to grow by up to 40% this year.
