BAML refinances Coeur Défense with €410m CMBS offering

Bank of America Merrill Lynch (BAML) has launched the first new French CMBS since 2007 based on almost half of the loan it provided to Lone Star in February for the acquisition of the Coeur Défense office complex in Paris.

The bank has placed €410 mln of the loan in a commercial mortgage-backed security called Taurus 2014 FR-1, secured against Europe's largest office property which is currently valued at almost €1.3 bn.

The CMBS transaction is split into two tranches comprising €328 mln in Class A Notes and €82 mln in Class B Notes, and is listed on the Irish Stock Exchange.

The CMBS was priced at 185 bps over the three-month Euribor for the first tranche up to 50% LTV and at 350 bps for the second tranche up to 62% LTV.

BAML originally financed Lone Star’s acquisition of Coeur Défense in February with a loan of €930 mln, including €805 mln of senior debt and €125 mln of junior debt. AXA Real Estate purchased around 30% of the five-year loan as part of its strategy to team up with banking partners in syndication processes.

Coeur Défense is currently valued at nearly €1.3 bn, reflecting a 62% LTV on the senior loan and 71.6% LTV on the whole loan. The office complex has an occupancy rate of around 74%, generating €94 mln in rents. The scheme has a weighted average unexpired lease term of 4.86 years and 2.57 years to first break clause.

David O’Connor, banking and finance partner at law firm Mayer Brown, which advised BAML on the operation, said: 'This deal is another indication of the continuation of the European CMBS market recovery.'

Coeur Défense, the largest office complex in Europe, was put up for sale last year through Morgan Stanley as the building’s owners faced a July 2014 deadline to repay over €1.5 bn of debt.

The 180,000 m2 office complex was sold to US private equity firm Lone Star for €1.3 bn, reflecting a discount of nearly 40% to the €2.1 bn it traded for at the peak of the market in July 2007.