J.P. Morgan Chase and ABN AMRO have launched Pan-European Industrial Properties Series 1 SA (PEIP), the third pan-European commercial mortgage-backed security (CMBS). PEIP will issue EURO210 million bonds structured in one tranche, rated triple-A by Standard & Poor's. It follows the Europa One deal, which closed in March 2000, and the Europa Two deal which closed in April 2001. The bonds are secured on distribution facilities in France, the Netherlands and the United Kingdom. Prologis Trust, a U.S. real estate investment trust selected, developed and leased the following sites in the three countries:

*eight tenancies in France, providing 13% of the rent;

*seventeen properties in the Netherlands, providing 35% of the rent; and

*seventeen properties in the United Kingdom, providing 52% of the rent.

"I think this is the start of quite a considerable series of transactions," said Ronan Fox at Standard & Poor's. "And I expect these will include more credit default synthetic deals similar to the Europa Two transaction. The essential driver in deals such as this is balance sheet management.

It is a natural function for issuers such as Prologis, which have a pan-European real estate business."

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