The Securities and Exchange Commission is reportedly banning Standard & Poor’s Ratings Services from rating CMBS for an entire year as part of an SEC probe and subsequent $60m settlement with the ratings agency. The SEC’s investigation looked at whether S&P bent its criteria to win business on six CMBS deals issued in 2011, according […]
1 min read · 20 January 2015
Many of the concerns that rippled through the CREFC Miami conference this week were directed at the US CMBS market. Delegates asked tough questions about the quality of loans, underwriting and leverage levels. The Canadian CMBS panel this morning at the Fountainbleau Miami Beach offered a striking contrast, with a range of top Canadian lending […]
2 min read · 09 January 2015
Spare an unforeseen rally, it’s looking like the year-end US CMBS issuance tally will fall short of the triple-digit billions number many had predicted, anticipated and/or hoped for. As of today, there was $87bn of CMBS issuance, according to TREPP.
3 min read · 19 December 2014
Deutsche Bank and Crédit Agricole have brought back to the market the £750m CMBS, secured against Westfield’s Stratford City regional shopping centre in east London. The initial proposed deal was pulled in August because neither the sponsor or the advising banks were proposing to retain 5% of the notes of the issuance as is usually […]
2 min read · 30 September 2014
Recovery rates on liquidated US CMBS loans rose sharply to 69.5% in Q2, according to Fitch Ratings’ latest CMBS special servicing index. Stephanie Petosa, a Fitch managing director, noted in a statement that the substantial rise came after the rate had reached historic lows the two previous quarters, adding that “a sizeable portion of CMBS loans were liquidated with less […]
1 min read · 29 September 2014
Deutsche Bank has launched the first CMBS in the Netherlands and the first to more than one borrower to be structured this cycle. The DECO 2014 TULIP CMBS is made up of two loans made by the German bank: one to PPF Real Estate Holding and the other to a joint venture between Mount Kellett […]
1 min read · 16 September 2014
US CMBS delinquency rates stalled last month after a 13-month free fall, but experts said they could bounce back with the help of upcoming online property auctions. Research and data group Trepp said the overall US CMBS delinquency rate decreased by just one basis point in July, to 6.04%, after a year-to-date drop (through June) of […]
2 min read · 20 August 2014
The £750m proposed agency CMBS to refinance Westfield’s Stratford City shopping centre in London has been pulled amidst uncertainty over ‘skin-in-the-game’ regulations. Westfield, advised by its banking partners Deutsche Bank and Crédit Agricole, had decided not to retain 5% of the notes, the so-called ‘skin-in-the-game’ designed to regulate arranging banks and align their interests with […]
2 min read · 06 August 2014
The refinancing prospects of the UK’s €58bn of outstanding CMBS loans “remain challenging” according to ratings agency Standard & Poor’s. S&P warned in its latest CMBS bulletin covering the second quarter of the year that the disparity between prime and secondary property yields could result in “repercussions for refinancing European CMBS loans, many of which […]
2 min read · 05 August 2014
Canadian Pension Plan Investment Board and Metropolitan Life have acquired $475m of mezzanine debt as part of a refinancing of five Kyo-ya Hotels & Resorts in Hawaii and California. CPPIB through its CPPIB Credit Investments II vehicle has bought a $300m junior mezzanine (B) loan at Libor plus 6.6% secured on the hotels, while MetLife invested in a $175m senior mezzanine (A) loan with a Libor plus 4.5% interest rate. The Hawaiian hotels – Sheraton Waikiki, Sheraton Maui Resort & Spa, Westin Moana Surfrider and The Royal Hawaiian – and The Palace Hotel (San Francisco) have a combined 4,016 rooms. The hotels were refinanced by Deutsche Bank via its New York-based German American Capital Corporation subsidiary. GACC was the originator and mortgage loan seller, while the Japanese Kyo-ya Hotels & Resorts is the borrower. A two-year, floating-rate loan with three one-year extension options, secured by the fee and/or leasehold interests in the full-service hotels was securitised as COMM 2014-KYO and, in addition to the first mortgage loan, GACC originated the two mezzanine loans on the deal. Deutsche Bank priced the $551m top slice of the seven-tranche $1.4bn CMBS deal at Libor plus 90 basis points, with S&P and Morningstar rating it AAA. The quality and location of the properties, positive operating trends and strong Hawaiian tourism were among the strengths listed by the agencies in presale reports. The hotels operate under three different Starwood-affiliated brands: Westin, Sheraton, and The Luxury Collection. The issue is the second refinancing of the portfolio in just over a year; in 2013 Goldman Sachs issued a $1.1bn CMBS, GSMS 2013-KYO, backed by most of the same collateral. In an unsolicited commentary on the latest deal, Fitch said that the top tranche rating was consistent with its own AAA rating, but that it “likely” would have assigned subordinate ratings to subordinate tranches, because of the $300m of additional debt that has been tacked on, even though 1,142-room Sheraton Princess Kaiulani, the weakest property in the GSMS 2013-KYO pool, does not feature in the current issue. “The increase in total debt and the reduction in supporting collateral should give investors pause,” the Fitch report stated, calling the additional debt part of a “troubling trend” among US CMBS lenders. Fitch’s maximum leverage for a ‘B-‘ rating is 80.5% which would allow $1.159bn of debt, and a spokesperson would elaborate only by saying that the LTV on $1.4bn would be materially higher. S&P acknowledged that at an 82.6% LTV based on its valuation, the loan is “highly leveraged” and “higher than most single-borrower transactions we have rated recently.” With the mezzanine debt, the LTV increases to 110.6%. “We are aware of the risks Fitch highlighted and factored them into our analysis, but disagree with their conclusions,” a spokesperson for S&P said. “There have been numerous occasions where we believed that the risks were greater than our competitors did but we think the market benefits from a diversity of opinions on credit risk.”
3 min read · 22 July 2014
