Bank of America has launched a £281 million commercial real estate backed securitisation collateralised by a £400 million portfolio of principally industrial portfolios in England owned by Starwood Capital.
The properties were most previously owned by the Balanced Commercial Property Trust, the listed UK real estate investor, which Starwood bought for £673.5 million cash last year, as detailed here.
The transaction - Taurus 2025-3 UK DAC - is a securitisation of a £281 million floating-rate loan originated by Bank of America and backed by a portfolio of 14 industrial and logistics properties and one retail park in England, which are collectively owned and managed by Starlight Bidco. The company is controlled by funds managed by the Starwood Capital Group and was set up to buy the Balanced Commercial Property Trust.
The borrower is Bluebird Subholdco, a Guernsey-registered vehicle ultimately owned and controlled by Starwood. The servicer and special servicer is CBRE Loan Services while the asset manager is Brightbay Management Services.
The loan is is split into two facilities – a 68% loan-to-value ratio facility, which totals £271 million, and a 70% loan-to-cost ratio facility or capex facility, which totals £10 million. The first will refinance the borrower group's existing indebtedness and other corporate expenses, while the capex facility will finance part of the £14.2 million capital expenditure works planned by Starwood over the loan term.
On 21 March 2025, Cushman & Wakefield conducted valuations on each of the 15 properties and appraised the aggregate market value at £398.8 million. It also valued the property portfolio at £416.3 million if it transacted as a single portfolio sale.
Morningstar DBRS, acting as ratings agent, said that translates into a day-one loan to value of 70.5% and 67.5% based on the aggregate market value and the portfolio market value, respectively.
As of 10 March 2025 the property portfolio comprised 2.9 million square feet of gross lettable area and houses 51 different tenants at an occupancy level of 95.1%. Physical vacancy is mostly concentrated in a single industrial and logistics property in Birmingham, which represents 127,069 square feet of the lettable area.
The property portfolio generated £21.7 million in-place gross rental income and £21.5 million net operating income and has an estimated rental value of £28.6 million. The weighted-average unexpired lease term is 7.3 years. The industrial assets are concentrated in the Midlands (42.5%) by aggregate market value) and the North West (25.3%), with the remainder in the South East (15.2%).
The other 17% of the aggregate market value is represented by Newbury Retail Park, close to Newbury's town centre.
The largest tenant is Kimberly-Clark, which occupies an 361,604 square foot warehouse in the Revolution Park industrial estate. No other tenant accounts for more than 9% of the total gross rental income.
The top 10 assets are: Newbury Retail Park, in Newbury; Site E4, DIRFT in the east Midlands, home to CEVA Logistics; Revolution Park – Units 6 & 8 in Chorley; Unit 1, G Park, Portal Way; Unit 8 Hams Hall in Birmingham; Orion 1 & 2; Unit 10A Hams Hall; The Cowdray Centre in Colchester; Upper Northam Road in Southampton; and Unit 4, Quintus Business Park in Staffordshire.
The European CMBS market opened 2025 strongly with more issuers, sponsors and asset classes thanks to increasingly competitive pricing, though it has slowed in recent months.
In March Citibank launched a securitisation of three senior commercial real estate loans totalling £840 million secured against a giant portfolio of Blackstone Real Estate Partners' industrial assets in the UK, in the fifth issuance in Europe of the year, as reported.
In February, Blackstone's first European CMBS of the year, the €525 million Sequoia Logistics 2025-1 DAC, the largest euro-denominated issuance CMBS since 2021, priced at a weighted average margin of 192 basis points, the keenest for a direct CMBS in four years, as reported.
CMBS deals priced tighter as 2024 progressed thanks to falling interest rates. There were five European deals in the year, meaning this year's transactions already top that number. The only deal that did not involve Blackstone last year was Vantage’s £600 million data centre CMBS. Three of Blackstone's transactions involved logistics properties, underlining investor demand for the asset class.
In 2023, 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 shut down. The figures are way down on the €7 billion issued in 2021.