Commercial and residential property lender Thinktank has successfully closed the largest commercial mortgage-backed securitisation (CMBS) of its kind recorded in Australia.
The milestone came when Thinktank closed its seventh CMBS issue for A$750 million.
Coupled with its first A$500 million residential mortgage-backed securitisation (RMBS) issue in August, it takes the total of bonds issued to A$3.2 billion.
Thinktank CEO Jonathan Street said: “The participation of 20 institutional investors, both in Australia (90%) and overseas (10%) for this A$750 million deal, illustrates a continuation of keen demand for alternate asset-backed issues.”
The transaction was assigned final ratings from Standard and Poor’s. The A$450m Class A1 Notes and the A$124.5m Class A2 Notes are rated AAA(sf). The A$48.75m Class B Notes, the A$48.75m Class C Notes, the A$33.75m Class D Notes, the A$18.0m Class E Notes and the A$12.75m Class F Notes have assigned ratings of AA(sf), A(sf), BBB(sf), BB(sf) and B(sf) respectively.
Pricing was fully disclosed across the structure with the Class A1 Notes being set at a margin of 1.05% above the 30-Day Bank Bill Swap Rate.
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Real money investors represented 70% of the total amount issued while banks accounted for 30%. The transaction was 1.4x over-subscribed representing bids exceeding A$1,050 million. The pool of 1,262 first mortgage loans with an average size of A$594,294 comprised 42% industrial properties, 15% retail, 14% office, 9% other commercial and 20% residential. 80.5% of properties were located in metro areas with 19.5% in non-metro areas.
New South Wales was the most prominent state with 52% followed by Victoria with 25% and Queensland at 13%. Self-managed superannuation fund (SMSF) borrowers accounted for 31% of loans while the weighted average Loan to Valuation Ratio (LVR) was 63.8%. Just under 50% of loans were to investors with the balance to owner-occupiers.
Most loans were on principal and interest repayment at 64% with only 36% in an interest only period.
Mr Street commented: “Nearly two years into COVID, the fact we have been able to successfully complete both CMBS and RMBS issues for A$1,250 million in the past few months speaks volumes for how the business has successfully negotiated the pandemic and has continued to provide credit to the critical SME and self-employed sectors of the economy on a competitive and scalable basis.”
