Bank of America Merrill Lynch plans to securitize two European commercial mortgage loans worth a combined €186 million ($209 million).
MStar, a joint venture between Starwood (a U.S. based investment firm) and M7 (an experienced player in the European industrial real estate market), is the borrower.
The securitization, called Taurus 2015-3 EU Designated Activity Company, is secured by 62 light industrial properties located in France, Germany and the Netherlands.
BAML plans to retain 5% of both loans and will issue a total of €176.7 million of securities.
Moody’s Investor Service assigned a preliminary ‘Aaa’ to the class A bonds; ‘Aa3’ to the class B bonds; ‘A3’ to the class C bonds; ‘Baa3’ to the class D bonds; ‘Ba2’ to the class E bonds and ‘B3’ to the class F Bonds.
The bonds have a weighted average life of 4.5 years with an expected maturity set for April 2020 and a legal final maturity of April 2028.
Both loans have a high Moody’s LTV in the range of 85%-95%. The loans have no scheduled amortization exposing them to larger refinancing risk when they mature. However Moody’s said that the strong covenants “help improve the credit profile of the loans and hence the ability to refinance.”
Most of the assets securing the loans are more than 20 years old. The buildings are built with warehouse space on ground floor and offices above, and multiple tenants will occupy the same site, according to the presale.
No single property represents more than 6% of the total market value of the portfolio. There are more than 300 tenants from diverse business sectors with the largest tenant representing less than 4% of the total passing rent for the portfolio.