The latest European commercial mortgage-backed securities deal has the tightest pricing of the year.
The most senior notes, AAA, in the Blackstone-sponsored UK Logistics 2024-2 DAC CMBS priced at 135 basis points. The pricing of the same notes in the private equity firm’s logistics European CMBS, Thunder Logistics 2024-1 CMBS, priced at 150 basis points in October, as reported.
Investor demand outstripped supply with the books being 2.4 times covered.
The CMBS is the securitisation of two senior loans, called Mileway and Indurent, provided by Bank of America and Morgan Stanley secured against a 4 million-square-feet portfolio of standing logistics properties and 3 million square feet of industrial outdoor storage space, concentrated in the South East. The properties have been valued at £602.3 million, excluding a portfolio premium, by JLL. Together, they produce £28.7 million of net operating income a year. Indurent is the name of the industrials platform Blackstone launched earlier this year after the merger of its St. Modwen Logistics and Industrials REIT businesses, as reported.
CMBS deals have priced tighter as the year progressed thanks to falling interest rates. There have been five European CMBS deals this year, totalling €2.3 billion. The only deal that did not involve Blackstone was Vantage’s £600 million data centre CMBS. Three of Blackstone's transactions involved logistics properties, underling investor demand for the asset class.
Last year, there were three CMBS transactions, totalling €909 million, 40% less than the €1.5 billion issued in the first four months of 2022, before the market came to a grinding halt. The figure pales in comparison with the €7 billion issued in 2021.
(Updated on 28 November to correct pricing on Thunder in CMBS in second paragraph)