Royal Bank of Scotland is in the process of selling the first US commercial mortgage-backed securities deal for almost two years.
The bank’s US property division has packaged up $309m of new loans secured against US assets and is selling bonds secured against these loans to institutional investors.
Appetite for the bonds will be keenly watched by lenders both in the US and Europe. During the global financial downturn, the CMBS market on both sides of the Atlantic dried up completely due to the rapidly falling value of the properties against which loans were secured.
The type of deal undertaken by RBS – where a bank tries to package up loans to multiple borrowers and sell them to investors – is the first to take place in the US since June 2008.
The few multi-borrower CMBS deals conducted in the past two years have seen bonds sold to government-backed buyers, such as the Term Asset-Backed Securities Loan Facility (TALF) in the US, and the European Central Bank.
The loans against which the RBS bonds are secured are backed by 81 properties across the US. The largest is a $78m facility secured against a 1m sq ft shopping mall in Lubbock, Texas.
In Europe, the securitisation market threatened to spark back into life last summer, with three deals totalling almost £1.5bn well received by bond investors. Tesco undertook two CMBS deals using some of its superstore and distribution warehouse assets, and Land Securities raised £360m through the securitisation of its Queen Anne’s Gate office building in Victoria, W1.
However, no bank in Europe has attempted to parcel up new loans for sale in the general market since 2007.
RBS declined to comment.
Servicer supports istithmar loan
A default on the junior part of a £253m loan secured by Barclays against the iconic Adelphi building in the Strand, WC2, owned by Istithmar, has been waived.
In spite of this breach – on the income cover ratio of the junior portion – the loan would not be transferred to special servicing, said Barclays, as the asset had no underlying cashflow issues. A breach of the 80% loan-to-value covenant was waived last year.
“Basically, Barclays Capital Mortgage Servicing will not be taking action,” said Michael Cox, analyst at Chalkhill Securities.
