Bank of America Europe has launched its first UK CMBS transaction of 2021, secured on a Blackstone-owned Mileway industrial warehouse portfolio.
Taurus 2021-1 UK is a five-tranche, £340.1 mln issue and will price next week.
The underlying security is a single loan with an LTV of 61.6% secured on the United V portfolio, 45 last mile logistics and industrial assets across the UK valued at £557 mln. The two-year loan can be extended to 2026.
Current occupancy of the portfolio is 92% to 180 tenants and the debt yield on the net operating income (post rent-frees) is 7.2%. There is also an £85 mln mezzanine loan secured on the assets, taking the total debt to £425.2 mln.
A pre-sale report issued by rating agency KBRA reveals the potential to increase passing rent by almost 22% if 36 below market properties can be released to market rents and three vacant assets are let.
The largest property is Summit Centre, a 163,161 sq ft industrial estate on Bath Road near Heathrow Airport. According to CBRE, vacancy for logistics properties across the UK was 5.1% as of Q3 2020, which is a decrease of 0.8% from the year-end 2019 level of 5.9%.
The CMBS is the sixth to be announced which has secured on European real estate over the past 12 months and the seventh since the start of 2020, according to rating agency DBRS. The value of CMBS issuance in Europe in 2020 was just €2.1bn, versus €6.5 bn in 2019 before the pandemic, in 17 transactions.
In its 2021 European Structured Finance Outlook, DBRS said: ‘The transactions issued in 2020 were mostly secured by logistics (two) and office (two) properties and for 2021 logistics properties are expected to remain the most popular by arrangers and investors, as the asset class has been impacted to a lesser degree by the pandemic.
‘Blackstone continues to be the main sponsor behind European CMBS transactions, with four of the six transactions publicly distributed in 2020, including a multi-family transaction secured by social housing assets.’
