Toys“R”Us Deal Tests Europe CMBS

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Toys “R” Us issued a £263. 2 million commercial mortgage-backed securitization, according to a Standard & Poor’s presale report.

Cairn Capital is lead manager on the deal. S&P has assigned ‘A-’ rating to the class A notes. The structure also includes class B and C notes that have not been rated by S&P. According to a Deutsche Bank securitization report, the structure’s rated, 7-year notes, priced at a coupon rate of 5.93%.

The notes are backed by a fixed-rate interest-only loan secured on a portfolio of 30 retail stores and one distribution warehouse in the U.K. Toys "R" Us Properties owns the properties and rents them to Toys "R" Us Ltd. on 30-year leases.  

Most of the assets are standalone detached stores built for Toys "R" Us. They range in size from 24,785 sq ft to 49,771 sq ft, and the average store size is 40,130 sq ft.

Because many of the stores were developed in the 1980s and early 1990s, the properties' age, said S&P, “isolates some of them from the locations of new retail developments.”

CB Richard Ellis valued the portfolio at £315 million in March 2013. Based on this value, the whole loan's loan-to-value (LTV) ratio is 83.5% and the class A notes' LTV ratio is 58.5%.


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