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CRE Finance World Autumn 2015
17
There is no particular reason why CMBS trading on the unregulated
market of a stock exchange could not be issued with short and
simple offering circulars with investors undertaking their own
due diligence. However, this has not yet been seen in the market
and there seems to be no consensus as to whether this would be
acceptable to investors.
Conclusion
European CMBS is set for its best year since 2007. €3.3 billion
of new CMBS has been issued in Europe in the first half of 2015
compared with €887 million in the first half of 2014. It is also clear
that new pressures from regulators and market sources are driving
the development of new forms of CMBS.
The development of products such as unrated CMBS and A/A2
CMBS shows that CMBS can continue to innovate and find
solutions to the challenges it faces. As such, the future of CMBS
in Europe seems more secure today than has been the case for
a number of years.
Appendix
Publicly Announced European Unrated CMBS
Date Name Amount (M) Assets Arranger
August
2012
Utrecht
Funding 1
£215 Dutch
offices
Eurohypo
June 2013 DECO 2013
– CSPK
£380 UK offices Deutsche
Bank
September
2013
Monnet
Finance
€406 German
multi-family
Deutsche
Bank
January
2014
Reni SPV €135 Italian retail BNP
Paribas
August
2014
Taurus 2014
FR-1
€410 French
offices
Merrill
Lynch
August
2014
Pangaea
Funding 1
€237 Greek
offices
Cairn
Capital
December
2014
Zephyrus
(ELOC 30)
£196 UK retail Morgan
Stanley
February
2015
Mint
Mezzanine
2014
£75.9 &
€30.9
UK hotels J.P. Morgan
April 2015 Midas
Funding UK
£100 UK offices Morgan
Stanley
July 2015 Lusso S.r.l. €75 Italian retail BNP
Paribas
1 Bank of America Merrill Lynch – European SF & CB Weekly, 1 June
2015.
2 Bank of America Merrill Lynch – European SF & CB Weekly, 18 May 2015.
3 Bank of America Merrill Lynch – European SF & CB Weekly, 8 June 2015.
4 European Regulation (EU) 648/2012, 4 July 2012
5 European Regulation (EU) No 575/2013, 26 June 2013.
6 Many pre-credit crunch CMBS did not provide this information.
7 In a small number of transactions fees and margins were higher or lower
than shown here.
8 European Regulation (EU) 575/2013.
9 Article 4 Clause (61) of Article 4(1) of European Regulation (EU)
575/2013. Under CRR, a tranche can be a class of bonds or a loan.
10 European Regulation (EU) No 462/2013, amending Regulation (EC)
No 1060/2009.
11 Real Estate Capital, Quasi-CMBS issues sound a new property debt
note, June 2015.
12 Zephyrus (ELOC 30) issued one class of bonds and a subordinated
loan which is treated as a tranche under the CRR.
13 Real Estate Capital, Quasi-CMBS issues sound a new property debt
note, June 2015.
14 Subject to limited exemptions for the most senior tranches of bonds issued.
15 In transactions where the composition of the pool of securitised assets
is known at all times, as an alternative, investors may look through to
the risk weighting of the pool and apply a weighted average risk weight
by multiplying the risk weight of the underlying assets by a concentra-
tion ratio equal to the nominal amount of all tranches in the structure
divided by the nominal amount of all tranches junior to or pari passu
with the tranche in which the firm has a holding. However, as CRE loans
are themselves 100% risk weighted, this is unlikely to produce a better
result.
16 These schemes are dynamic and flexible and have on occasion relaxed
their criteria (including ratings requirements) for particular types of
investments and particular jurisdictions to meet market needs.
17 A two tranche £171.1 million UK office CMBS rated A/BBB- arranged
by RBS.
18 Bank of America Merrill Lynch – European SF & CB Weekly, 1 May 2015.
19 For the purposes of the Markets in Financial Instruments Directive
2004/39/EC (MiFID).
20 European Directive 2003/71/EC.
21 The Mint Mezzanine offering circular runs to 366 pages.
Unrated CMBS: A New European Asset Class