Gatehouse Bank announces innovative Commercial Rental-Backed Security

January 20, 2015

Gatehouse Bank plc (“Gatehouse”), the London-based investment bank specialising in Shariah-compliant products and services, is pleased to announce the launch of an innovative securitisation in the property market using a CMBS-like structure, which will be known as a Commercial Rental-Backed Security (“CRBS”). In this landmark transaction, Gatehouse will act as sole structuring agent, arranger and lead manager to an over €100 million acquisition facility relating to a commercial office property in the Paris region.

The two-tranche fixed rate certificates will be backed by the direct legal ownership of the property, which provides an additional credit enhancement, and makes the issuance compliant with Shariah finance principles, and differs from a conventional CMBS structure.

The CMBS market is undergoing a revival, with institutional investors increasingly seeking access to the asset class. The CRBS structure of the transaction has the added advantage for investors of avoiding potential foreclosure procedures given that the security underlying the certificates will include ownership of the property itself, and not limited to a mortgage.  

The listed issuance will have a five-year term, and will benefit from a five-year tail period between the original facility maturity, and the final legal maturity date. The European roadshow will start in the next few weeks, and will include site visits to the property.

Natale Giostra, Head of Real Estate Finance at Gatehouse Bank, commented: “This issuance offers institutional investors access to the European securitisation market, with the added benefit of an ownership structure which gives investors greater security than would normally be available under a traditional collateralised facility. Given the increasing demand for European CMBS and the unique structure of this securitisation, we expect strong market appetite for this issuance, and are confident the market for this structure will continue to grow.”

Mount Street Mortgage Servicing Limited (“Mount Street”), an experienced and wholly independent loan servicer, has been mandated as servicer and special servicer. Mount Street has a proven track record of bringing fresh and innovative servicing solutions to the European real estate loan management sector, which ties in perfectly with this exciting new opportunity.

Paul Lloyd, Managing Partner for Mount Street said: “This issuance demonstrates Gatehouse’s innovative approach to the European securitisation market in enabling investors to avoid one of the potential problems when dealing with CMBS products, such as the possibly lengthy foreclosure procedures.”

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