The Federal Reserve’s effort to stimulate economic growth is aiding property owners as far afield as the Pacific islands as commercial-mortgage bond issuance surges.
A $60 million loan on a shopping mall in Guam contained in a $1.3 billion transaction from UBS AG and Barclays Plc is a rare instance of a U.S. territorial property in a domestic deal, according to Bank of America Corp.
Wall Street banks are boosting sales of securities tied to shopping malls, office buildings, hotels and apartment complexes as investors seek out riskier assets with the central bank holding its benchmark borrowing rate close to zero into a fifth year. Lenders are stretching to find property debt to sell off as bonds as issuance booms, Bank of America analysts led by Alan Todd said in an April 5 report. Though the Guam mortgage is relatively conservative, it illustrates the trend, the analysts said.
“Including non-U.S. domiciled properties is yet another instance of originators being forced to look to potentially non-traditional places,” for loans, according to the New York-based analysts.
The mortgage for the Bayview Plaza in Guam, the U.S. territory located 5,800 miles west of San Francisco, is the seventh-largest in the offering from UBS and Barclays, according to Bank of America. The loan may be the first in a U.S. CMBS deal not located in one of the United States, Mexico or the Caribbean, according to Bank of America.
The mortgage from UBS, with an interest rate of 5.19 percent, was used to refinance $34.1 million of maturing debt, according to deal documents. The property, located in the tourist center of Tumon, was valued at $94 million as of Dec. 19, the documents show.
Issuance of commercial-mortgage bonds is poised to climb 50 percent to $70 billion in 2013, according to JPMorgan Chase & Co. Banks have arranged about $22 billion in deals this year, with as much as $9 billion in sales forecast this month, JPMorgan analysts led by Ed Reardon said in a report last week.
Deutsche Bank AG and Cantor Fitzgerald LP today announced a $505 million deal linked to 87 properties across the U.S., according to person familiar with the offering who asked not be identified because they aren’t authorized to speak publicly. California accounts for 36 percent of the deal, followed by Florida, Illinois and North Carolina, deal documents show.