Blackstone is sponsoring the second CMBS deal of the year, after its Last Mile Logistics UK 2023–1 was priced in July. While Last Mile Logistics was entirely preplaced, Stark Financing 2023–1 is to go on public offer.
However, it appears the new deal has also been premarketed. There is a protected order for the class ‘A’ notes and pricing is targeted for this week, a rapid execution considering there are six other deals in the European ABS market competing for attention.
The portfolio for Stark, on which the loans, originally from the joint arrangers Bank of America and Deutsche Bank, are secured, consists of 103 assets across the UK.
“Most of the portfolio properties are warehouse facilities or have a warehouse component,” according to KBRA’s presale report. Of the assets, 70% are close to motorways so have coveted “last mile” locations.
Esoterics thrive
The deal is the latest example of the growth of sectors away from the traditional retail and office deals that dominated CMBS before the global financial crisis.
“Specialised institutional borrowers owning portfolios with real expertise in their field offer something more to the real estate fundamentals,” a recent DBRS report said.
“We have seen assets enter European CMBS which have allowed investors to back their expertise,” Dinesh Thapar, vice-president of European CMBS at DBRS added. “The emergence of modern data centres will be interesting going forward. It’s one to keep an eye on. Data centres have been around for a while but not really in the European CMBS market.”
He also gave the example of cold storage CMBS.
“It’s a slightly more complex product for a fairly small investor base than typical industrial assets,” said Thapar.
The first such deal, Cold Finance from Goldman Sachs, came in 2019 and was repaid in full in 2021. A second deal, Frost CMBS 2021–1, also from Goldman, followed.
The market will hope to build on Blackstone’s brace of deals, but there may have to be a further repricing of CRE for that to happen.
“The issue for the market coming back is where do we see values,” Thapar said. “It’s still a bit uncertain as to whether values have actually bottomed out or not.”