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Official pricing guidance on Westfield Stratford CMBS just released

Deutsche Bank and Credit Agricole CIB have in the last half an hour published initial pricing guidance for the single-tranche, investment grade agency-style securitisation of the fixed-rate £750m loan secured by Westfield Stratford City shopping centre.

The two investment banks, which launched the West£eld Stratford City Finance PLC CMBS last Monday, are guiding:

  • Class A: AAA(sf)/ AAA(sf), £750m, 38.4% LTV @ 87-90bps over 3mL;

This morning’s official pricing guidance reflects a 15 to 20 basis points pick-up on equivalent AAA-rated notes in recently issued German multi-family deals – including GRF 2013-1, GRF 2013-2 and Taurus 2013 GMF 1 – which are trading between high 60s to low 70s bps over three-month Euribor.

However, the issuance remains a test to determine how deep the market is for sterling-based investment grade paper, particularly during the summer season.

DBRS and Fitch Ratings have both confirmed their ratings and have now issued presale reports.

Deutsche Bank and Credit Agricole CIB have jointly provided the liquidity facility for the transaction, required to obtain a AAA-rating.

Capita Asset Services (UK), one of the largest commercial mortgage servicers in Europe, is the named servicer and special servicer for this transaction.

The single loan refinances the existing £550m senior loan financing syndicate, jointly led by Eurohypo, HSBC and CA CIB in August 2011, in a process dubbed Project Agora.

The 1.9m sq ft Westfield Stratford City shopping centre, Europe’s largest urban shopping and leisure destination and valued at £1.95bn by CBRE in May 2014, is still 50% owned by Westfield Corporation.

The Australian property developer and investor sold a 25% stake to both Canada Pension Plan Investment Board (CPPIB) and Dutch pension fund Algemene Pensioen Groep (APG) in December 2010 for a combined £871m.

The existing £550m senior syndicate, due to mature at the end of July 2016, was priced at between 225bps to 250bps over three-month LIBOR, and based on the upward re-valuation reflects a 28.2% LTV.

In October 2011, Eurohypo, HSBC Bank and CA CIB syndicated the senior debt to Aareal Bank AG in London, AXA REIM SGP on behalf of its clients, Bayern LB, MetLife, Credit Foncier, Deutsche Pfandbriefbank and Santander.

Westfield Stratford City shopping centre has a well-diversi£ed income stream, comprising 327 separate tenants, with the top 10 tenant exposures accounting for just 18.4% of the shopping centre’s gross leasable rental income.

In addition, the property also bene£ts from additional sources of income, including parking fees, branding income from signage at the shopping centre and income from providing utility services to the property’s tenants.

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