Japanese property developer Sumitomo Realty and Development plans to launch its first commercial mortgage securitization next month, in what is being called the first CMBS to be publicly offered in Japan.
The 24 billion ($195 million) transaction, arranged by Daiwa Securities SB Capital Markets and rated by Moody's Investors Service, is backed by the income from five office buildings owned by the developer. Those buildings will be entrusted to Sumitomo Trust Bank in exchange for trust certificates, which will be sold to an SPC called Sumquest that will issue securities backed by the certificates to investors.
The entire issue has already been committed to investors in Japan. High liquidity combined with the absence of similar debt securities in the domestic market in recent months ensured that the deal was fully subscribed well before the launch date.
"This was a very hot deal, since there is no paper in Japan right now," commented an official at one life insurance company in Tokyo. "We wanted to buy this, but it is already gone."
Three tranches of five-year securities will be issued: a 16 billion, Aa2-rated senior piece priced just under 2%; a 3 billion, A2-rated mezzanine piece priced between 2% and 3%; and a 5 billion, Baa3-rated subordinate piece priced just under 3%, according to a banker at Daiwa. - VC
