Five pan-European CMBS transactions have come to market so far this year. The number of these deals is expected to increase further as conduit lenders look to expand their operations in other European countries, said Moody's Investor Service in an outlook report published last week.
According to the report, the share of multiple borrower transactions has increased slightly from 40% in 2005, to 42% in the first half of 2006. Some of the larger transactions seen already this year include the 1.56 billion ($2.0 billion) Pan Europe 2 p.l.c., a securitization of 10 loans secured by properties located in Germany, the Netherlands and Switzerland, and the 1.37 billion Atlante Finance S.r.l, which is the first mixed pool CMBS transaction launched by Unipol Banca. The pool is made up of 60.7% commercial mortgage loans; 32.3% primarily residential mortgage loans; 3.1% unsecured loans to Italian public sector entities; and 3.9% other.
But as interest in these pan-European CMBS conduit transactions increases, some market players continue to highlight the importance of having a common European securitization legal framework to handle the complex multi-jurisdictional issues, which would ultimately help reduce the costs of executing such deals. Transactions that incorporate several jurisdictions can lead to more costs. And while some jurisdictions are becoming more compatible, bringing to market new types of deals could still prove difficult.
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