Marketing Info

Two more commercial mortgage bonds put on hold amid market weakness

(Bloomberg) — According to two bond investors, Columbia Property Trust Inc. And about $1.9 billion of commercial mortgage bonds involving a portfolio of office buildings owned by Allianz SE were delayed Wednesday due to market weakness.

And a commercial mortgage-backed security led by Deutsche Bank, known as COMM 2022-LSC, was also delayed after initial talks with investors.

The two transactions bring the number of CMBS to at least three in recent weeks as Russia’s invasion of Ukraine further upset capital markets already shaken by Federal Reserve rate hikes. On Monday, Deutsche Bank delved into a separate CMBS with a $1.5 billion offer linked to the firm’s new headquarters in Columbus Circle.

Selling debt of any kind, from junk bonds to asset-backed securities, has become more unpredictable lately, as more deals get postponed as a result of sharp moves in yields. It is a sharp change in the markets that credit will be handed over to almost any borrower during the last two years.

The Columbia property deal, known as CXP 2022-CXP, was initially marketed in February. The price was expected to be during the week of 16 and February. 21, according to deal documents seen by Bloomberg. The transaction secured two loans tied to seven office buildings located in New York, Boston, San Francisco, Jersey City, and Washington, D.C.

Goldman Sachs Group Inc., Citigroup Inc., and Deutsche Bank funded the loans and arranged the CMBS, which was intended to help finance the privatization of Columbia Property Trust, the deal documents say. Last September, Columbia Assets said it was being taken private by Pacific Investment Management Company, a subsidiary of Allianz SE, for $3.9 billion, including debt.

Representatives for Goldman Sachs, Citigroup and Columbia Asset declined comment, while a representative for Allianz SE did not respond to inquiries. Deutsche Bank did not comment on the Colombia deal or the COMM 2022-LSC transaction.

instability, office

In addition to general market weakness, some investors said the Columbia property deal tied to office buildings — a class of property where revenues are now uncertain as more people work from home — didn’t help matters.

“Volatility and office are not a great combo,” said Daniel McNamara, founder and CIO of Polpo Capital, a CMBS hedge fund.

According to the deal documents, the CXP transaction is tied to seven office buildings in relatively strong locations, including 1800 M Street in Washington, DC and 229 West 43rd Street in Manhattan. The DC building is linked to one loan, and the other six properties are linked to another loan.

With fears about the future of office space last year, a string of marquee properties were able to sell off CMBS in 2021 as investors clamored for securitized bonds that yield slightly higher than other asset-backed debt and corporate paper. provide.

According to data compiled by Bloomberg News, CMBS set a post-crisis issuance record with sales of more than $155 billion last year, tied to offices and other types of real estate, without support from government-sponsored enterprises.

—With assistance from Charles Williams, Carmen Arroyo and Erin Hudson.

© 2022 Bloomberg LP

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