Sept. 28 (Bloomberg) — Deutsche Bank AG is marketing about $609 million in bonds backed by commercial property loans in the first offering of its type since sales revived in November 2009.
The issue will be tied to floating-rate mortgages including debt on the Hotel del Coronado, located on oceanfront property near San Diego, and the Standard Hotel in Manhattan, according to people with knowledge of the offering. The Frankfurt-based lender has been assembling the pool for at least eight months, said the people, who declined to be identified because the discussions are private.
Wall Street banks are seeking to unload loans made before turmoil in credit markets that has cut into bank profits on new commercial-mortgage sales. Bankers have retooled offerings sold since August after demand shriveled amid a spreading European debt crisis and concern the U.S. economic recovery has stalled.
The transaction is tied to the debt of 52 properties and includes a $356.3 million portion with the top credit grades, according to one of the people.
Amanda Williams, a spokeswoman for Deutsche Bank, declined to comment.
Floating-rate loans, which are short-term and give property owners more flexibility to pay off the debt early, are often taken out when owners are anticipating a significant boost in income from the properties, and can be riskier for investors.
The Deutsche Bank transaction is the first so-called floater to compile debt from multiple borrowers since the commercial-mortgage bond market slammed shut in 2008 amid a lending freeze. Banks arranged a combined $66.4 billion in floating-rate commercial-mortgage backed securities in 2006 and 2007, according to data compiled by Bloomberg.
In June, JPMorgan Chase & Co. sold $425 million in floating-rate commercial mortgage securities linked to 13 hotels owned by the Blackstone Group LP.
Lenders have issued about $25 billion in commercial- mortgage backed securities this year, compared with about $11.5 billion in all of 2010, Bloomberg data show. Sales plummeted to $3.4 billion in 2009 compared with a record $234 billion in 2007, the data show.
Investors are demanding 295 basis points, or 2.95 percentage points, to hold top-ranked commercial-mortgage bonds rather than Treasuries, according to a Barclays Capital index. Spreads reached 303 basis points on Aug. 25, the most since June 2010, and are up from this year’s low of 178 on April 26.