NEW YORK CITY-Barclays Capital and UBS Investment Bank have filed a free writing prospectus on a CMBS issue that reportedly will go to market in April. Published reports put the CMBS conduit offering at $1.5 billion; it will be the fifth conduit deal thus far in 2012.
Largest of the loans in the package is $120 million in debt backed by the leased fee interest in the Dream Hotel Downtown at 346 W. 17th St. here, according to an SEC filing for UBS 2012-C1. Barclays and UBS did not respond by deadline to GlobeSt.com's requests for comment on the pricing or the timing of the offering.
The properties included in the conduit deal span six states and four property sectors. Along with the Dream Hotel loan, other collateral in the offering includes approximately $95 million in debt on the 916,039-square-foot Civic Opera House, a class B office property in Chicago; $88 million on the Trinity Centre, a class B office asset of comparable size in Lower Manhattan; about $85 million backed by 691,325 square feet of the 1.2-million-square-foot Poughkeepsie Galleria, a regional mall in Poughkeepsie, NY; Hartford 21, a 36-story multifamily tower in Hartford, CT that secures a $75-million loan; Two MetroTech Center in Brooklyn, also securing a $75-million loan; $65.7 million on the Hilton Nashville Downtown in Nashville; an 841,172-square-foot office tower at 1700 Market St. in Philadelphia that secures $61 million in debt; a $60.3-million loan on Bridgewater Falls, a 506,356-square-foot retail power center in Hamilton, OH; and $52.4 million backed by 101 Fifth Ave., an 80,820-square-foot office property in Manhattan’s Midtown South.
Having started 2011 firing on all cylinders, the CMBS market wound down as the year wore on, with the euro zone sovereign debt crisis and the cancellation of a $1.5-billion deal by Goldman Sachs and Citi in July. Nonetheless, the market did manage about $30 billion in issuance for ’11, yet analysts have been cautious in predicting a rally in new issues this year.
Nomura, for example, has predicted $27 billion to $32 billion in non-agency US issuance for this year, “based on conduit loan maturities and adjustments for increased agency originations, market volatility and uncertainty regarding regulatory changes.” Credit Suisse is somewhat more bullish. “Supply could surprise on the upside and we forecast $35 billion to $45 billion in private label CMBS and another $45 billion in agency CMBS,” Credit Suisse predicted in January. That being said, the bank also forecasts “negative net supply” in CMBS over the course of the year, which could bode well for spreads.
The CMBS market could gain momentum in spite of itself, simply because of the opportunities that will present themselves. The wave of debt maturities, according to RREEF’s newly issued US Real Estate Strategic Outlook report, “will peak between 2012 and 2013 and exceed $239 billion through 2017. Many of these loans will face a difficult and protracted refinancing environment. In addition, loans that were restructured during the crisis or were extended in the hopes of a better day will have to be reckoned with in the near-term. This could increase the amount of required refinancing in the market to $350 billion.”
As a result, Andrew Wright, CEO and managing partner of Tampa-based Franklin Street, thinks ‘12 will be better than last year. “There’s a lot of capital flowing in, and the tremendous amount of maturities will make deals a lot more accessible to investors,” Wright told GlobeSt.com’s Robert Carr in an article Monday spotlighting the outlook for CMBS.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
