Europe’s first real estate collateralised debt obligation (CDO) has been issued.
The €276m “Anthracite Euro CRE CDO 2006” issue is a collection of long-term forward-rate, commercial mortgage-backed securities and subordinate real estate debt notes expiring in 2042. Managed by Blackrock in New York, the notes will range within high-quality subordinate CMBS debt and B notes.
Two-thirds of the underlying property, mostly offices, is in Germany. The rest is in the UK.
The CDO is highly exposed to fluctuations in property values; however, long maturity dates tend to be more secure and stable. Interest rates are likely to rise over the next 36 years, reaping a higher rate for the investor.
This year the N-Star pool of commercial mortgage-backed loans of A and B notes totalled $900m (€687.3m) with a 2041 expiry date. And in June, the Wachovia CDO, worth $1.3bn (€0.9bn), issued floating-rate notes and preferred shares that mature in 2026.
