After the deluge of deals to hit the market in July, the pace finally looks set to let up just in time for a traditional summer slowdown. But before the lull begins, there still remain some busy days of pricing. Last week, pricing activity was dominated by the mega German multi-family deal GRAND, which provided a base for the remaining multifamily deals currently marketing.
Terra Firma's 5.4 billion ($6.9 billion) GRAND transaction saw price talk revised in on its class B, C and D notes, following oversubscription on each of these notes. The tranches priced at the tighter end of talk with the class B notes priced at 35 basis points, the class C notes priced at 72 basis points and the class C notes priced at 105 basis points. "The wave of private equity activity in the German multifamily housing sector over the past few years is beginning to be felt in the securitization market," reported a trader at Dresdner Kleinwort Wasserstein. "This transaction represents the refinancing of Terra Firma's activity in the sector, most notably the acquisition of Viterra from E.ON. The sheer size of the transaction, particularly given the time of year, meant that initial price guidance was suitably attractive."
On the heels of Terra Firma's deal is another capital markets takeout of private equity activity in the German multifamily housing sector. It is the securitization of a multifamily housing portfolio acquired by Fortress from the German Federal Retirement Agency (GAGFAH). The transaction has not been publicly marketed, with the Class A1 notes going in to a conduit while the other tranches were all preplaced. Price guidance has also been issued for Barclays Capital Quokka Finance. According to market reports, price guidance reflected the deal's strong secondary performance since launch. The 4.2 year, triple-A notes are talked between 20 to 22 basis points and the 5.2 year, triple-A notes are talked between 23 to 25 basis points. The class C, double-A notes are talked at the low to mid 30 basis points and the Class D, single A notes are talked at 70 basis points.
Market analysts also said they expect record securitization issuance in August to be boosted by activity from this sector. According to the Royal Bank of Scotland, July has already seen 23 billion of issuance volume with another 22 billion expected to price in the coming weeks. "The pipeline is dominated by CMBS and more, especially German, multifamily, with 8.6 billion from three transactions increasing the asset class's prominence," said RBS analysts. "Meanwhile, a solid pipeline of transactions exists, with different subtleties, many pushing to price ahead of the usual August slowdown."
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