Citibank is to launch a £500m student housing CMBS in the next few weeks as it seeks to exit its loans to Greystar and its investment partners.
The loans in the CMBS were made to Greystar over the past 12 months to finance its purchases of the £600m Nido portfolio and £110m Assam Place, E1, which were bought alongside the Canadian firm PSP Investments, and the £330m Athena portfolio, made up of former Opal Group assets, bought alongside Goldman Sachs.
The deal would be the first of its kind for Citi since the downturn. The return of the US investment bank to the securitisation market is another important step forward for the CMBS market, which has sputtered back into life in Europe over the past two years.
Investors are slowly becoming more comfortable again with the financial instrument, which had its reputation badly tarnished during the financial crisis, when billions of pounds of badly underwritten debt was left on the balance sheets of institutions that had bought notes.
Citibank is understood to have tested investor appetite for the deal at this week’s annual Global Asset Backed Securities conference in Barcelona.
The CMBS’s structure is understood to have been decided and the bank is awaiting a rating from Standard & Poor’s, which is expected in the next few days.
At close to £500m, the CMBS will be one of the largest launched into the market this year and comes ahead of an expected rush of CMBS deals into the market ahead of the annual lull in activity in August.
Other houses are also believed to be considering issuing CMBS before the summer break. These include Deutsche Bank, which is preparing an Iberian CMBS made up of Spanish and Portuguese loans to Baupost.
In addition, Royal Bank of Scotland’s and Goldman Sachs’ investment banking divisions, both of which have pulled CMBS deals in the past two months owing to a lack of investor interest, may bring deals back to the market.
Their return is likely to be partly determined by appetite for the Citibank deal as well as for JP Morgan’s Mint CMBS, which last week was priced around 20bps higher than initially expected.
