DBS Bank in Singapore recently launched its third quasi-commercial mortgage-backed securitization this year, a S$184 million ($109 million) transaction arranged for property developer DBS Land and backed by income from its office building in the central business district on 268 Orchard Road, which will be leased back to DBS Land for 10 years.
An special purpose vehicle called Baronet issued 10-year secured bonds priced at 6%, split into a S$30 million tranche for retail investors and a S$90 million institutional tranche. Both tranches were heavily oversubscribed, said a DBS banker.
DBS Land kept S$64 million of the bonds. No ratings were required, since the issue was entirely placed in Singapore which is a very small market, the banker said. DBS also provided investors with guaranteed coupon and principal redemption at maturity, and the chance to share in any gains from the sale of the building, the banker added.
The deal marks the second time that DBS Bank has arranged a sale-lease back transaction for DBS Land. Earlier this summer, the bank arranged a S$193 million CMBS backed by cash flow from the Robinson Point office building. Later this month DBS expects to issue its fourth transaction, this time backed by the Century Square office building.