Substantial attention has been given to the restructuring of the European CMBS deal called Fleet Street Finance Two.
This is happening as investors and transaction parties prepare to learn the ultimate outcome of key tenant Karstadt Warenhaus’ insolvency. The issuer, as part of the restructuring, has pushed the note maturity date to 2017 from 2014, with noteholder consent.
Standard & Poor’s expects that the Fleet Street deal will serve as a benchmark for future European CMBS restructuring as borrowers, servicers, and advisors seek solutions for troubled loans.
Fleet Street's restructuring, according to S&P, has rating implications. The notes’ ratings were lowered to ‘D’ on June 23 and subsequently raised to reflect the agency’s credit opinion of the recently amended terms.
Generally, for European CMBS, the rating agency reported further instability in May. S&P mentioned the failure of two more loans to meet maturity obligations, three that transferred to special services, and an increase in delinquencies. This volatility was reflected by downgrades on ratings for 24 classes of notes in eight European CMBS deals. S&P also affirmed the ratings on 27 classes of notes and withdrew the ratings from 18 classes, the agency announced.
Five European CMBS loans were scheduled to mature in May. Only one of them, Akero Multifamily Housing, which is backed by Swedish multifamily housing, repaid in full.
The borrower of a Tahiti loan secured on U.K. hotels did not make the maturity payment and the loan is now in standstill. On June 25, the maturity date on the loan was extended to 2012, S&P said.
The Prime loan in Talisman 1 Finance, backed by two German shopping centers, is also in a standstill.
The borrower of the Portuguese loan in European Property Capital 3, secured on a Portuguese out-of-town shopping center, has agreed to extend the loan term to 2011.
S&P is still waiting for an update from the servicer of Loan 20 in NEMUS Funding No. 1, the only loan in the transactions expected to mature in June.
There are 19 loans scheduled to mature in July, a record high for monthly loan maturities. Fourteen of these loans are secured on U.K. properties and the remainder on German and French properties, S&P said.