Deutsche Bank AG sold $856.6 million in bonds backed by commercial property mortgages, the eighth sale of its kind this year as Wall Street revives the market for debt tied to shopping centers and office buildings.
The top-rated portion maturing in 9.62 years yields 140 basis points more than the benchmark swap rate, according to a person familiar with the sale who declined to be identified because terms aren’t public. The largest top-ranked slice, maturing in 4.41 years, pays 130 basis points more than the swap rate.
Sales of bonds tied to commercial property loans are rising, with about $5.5 billion of the debt sold in 2010, up from $3.4 billion last year, according to data compiled by Bloomberg. Wells Fargo & Co. and Bank of America Corp. began marketing a $735 million offering yesterday. Sales may reach $35 billion in 2011, according to Standard & Poor’s.
Issuance tumbled 95 percent to $11.2 billion in 2008 from record $234 billion in 2007, choking off funding to property owners who came to depend on banks being willing to lend because they could package the real estate loans into securities and sell them on to investors.
Top-rated commercial-mortgage bonds sold prior to 2007 when underwriting standards were less stringent yield as much as 279 basis points more than benchmark swaps, according to RBS Securities Inc. data.
The Deutsche Bank offering is backed by 42 loans against 63 properties, almost half of which are in New York, Pennsylvania, California and Arizona, the person said. About 43 percent of the debt is tied to shopping centers and 29 percent to office buildings.