According to market reports Land Securities plans to issue a £360 million ($591 million) securitization of an office let to the Home Office in Westminster.   

The securitization of the Home Office building at Queen Anne’s Gate is called Sceptre Funding No. 1. It follows last month CMBS issue by supermarket retailer. The deal is arranged by HSBC.

Land Securities, said in a trading update last week it was readying itself for new property acquisitions in London, to take advantage of a 45 percent fall in property values.  According to market reports the risk of default on this new loan is relatively low given the high quality of the property and the secure cash flow from its government tenant, which goes to paying the interest on the loan.  

Moody’s Investors Service has rated the new bonds ‘AAA’. The Sceptre notes will have a final maturity of February 2027 and a weighted average life of 11.3 years. The properties generate an annual rent of £12.6m. The securitization was undertaken by HSBC.

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