There are at least 12 European commercial mortgage-backed securitizations in the pipeline that issuers hope to complete by year-end, say various market participants. The pipeline has grown, because CMBS are becoming easier to execute on the Continent, the market is maturing and investors are looking for diversification. The upcoming deals include a few synthetic deals from German issuers, including one first-time issuer, a few more European Loan Conduit deals from Morgan Stanley, a deal securitizing non-performing commercial mortgages from Italy and at least two single building transactions, say CMBS bankers and analysts.
Despite investor appetite, realistically, only seven or eight of the planned deals will come to fruition, notes one analyst. Generally, CMBS deals take at least five months to structure and some banks have just started the process, potentially making the December 31 deadline out of reach.
Still, the country diversification--more deals from outside the U.K.--has some saying the European CMBS market is finally beginning to mature. "Historically, the European CMBS market has been pretty much a one-trick pony. Exposure to the U.K. and, in particular, the Southeast and Greater London property market cycle has provided investors with little in the way of diversification. This is finally changing with the advent of true continental real estate exposures," says Alexander Batchvarov, head of international securitization research at Merrill Lynch in London.