3.29.10: JPMorgan Closes CMBS Conduit Loan, While RBS Prepares Multi-Borrower CMBS Issue

Ramco-Gershenson Properties Trust announced that it has closed on a new $31.3-million CMBS loan with J.P. Morgan; the loan is secured by its West Oaks II shopping center in Novi, MI and its Spring Meadows Place shopping center in Holland, OH. The $31.3-million financing represents a loan-to-value of approximately 60% for the two properties and has a ten-year term with a fixed interest rate of 6.5%. Proceeds from the loan were used primarily to reduce borrowings on the company’s revolving credit facilities, the company said in a statement. “This loan is one of the first CMBS transactions to be completed this year and highlights that long-term, attractively-priced capital is available for quality assets in strong markets,” said Dennis Gershenson, president and CEO. “This new financing will improve our flexibility in executing our 2010 business plan.”

Meanwhile, RBS is preparing a $309-million multi-borrower CMBS offering that is expected to price around April 8, 2010. The 5 class issue will contain all investment-grade bonds rated AAA through BBB-. The underlying real estate collateral consists of six five-year term loans containing 81 commercial real estate properties; 66% of the loans are secured by retail properties, 33% by office properties and 1% by industrial properties. The average loan-to-value for the portion of the loans included in the CMBS offering is about 55%. Some of the properties are secured by mezzanine debt, which will not be included in the CMBS issue, that increases the overall average to 65%. Average debt-service coverage approximates 2.40x on the portion of the loans included in the CMBS offering and about 1.80x on the entire loan amounts.

“The loans underlying this issue were underwritten very conservatively,” observed Michael D. Sneden, Executive Vice President of ValueXpress. “But it does not matter. I am excited because the industry needs something to go out the door. It appears that some of the loans were underwritten on an agency basis, so that the investment bank did not take any principal risk, but again, it does not matter. The winner is going to be the borrowers and CMBS investors. Borrowers have a real shot at sub-5% coupons and CMBS investors will get some great bonds,” Sneden said.

This entry was posted in Michael D. Sneden, The Banker's Mortgage Conduit, Valuexpress. Bookmark the permalink.

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