Citi and Macquarie hired to lead China's first dollar CMBS

As Asia's international ABS market begins to warm up once more, China takes first step into the offshore market.
Citigroup and Macquarie Bank have been mandated for a $145 million floating rate commercial mortgage backed securities (CMBS) note for issuer Dynasty Assets. Citigroup is the sole bookrunner, while Macquarie is the co-manager for the deal, which has a maturity of 2.75 years.

The transaction is the first dollar-denominated CMBS backed by properties in the PeopleÆs Republic of China (PRC).

The borrower is Dynasty Property Investment Holdings, a Bermuda incorporated financing subsidiary owned by Macquarie Wanda Real Estate Fund Limited (MWREF), a Bermuda based property fund. Macquarie Group and Dalian Wanda are the sponsors of the borrowing group.

The underlying assets are in nine cities in eastern China, with mortgages expected to be registered on at least eight of the nine properties, equivalent to 97% of the portfolio valuation. As at 31 January 2006, the properties have been independently valued by Knight Frank Petty at Rmb3.8 billion ($475 million).

The properties are located in Nanning, Jinan, Wuhan, Tianjin, Nanjing, Shenyang, Harbin, Dalian, and Changsha. The tenant base of the properties includes international corporations such as KFC and Pizza Hut as well as retailers Parkson and Wal-Mart.

This wide breadth of underlying properties provides a true nationwide geographical diversification to the portfolio, a first for an Asia-ex Japan CMBS.

Jones Lang LaSalle has been appointed as the managing and collection agent responsible for the repatriation of the rental income.

Although it has not yet received its finalised rating the transaction has an indicative international rating of A2 and A- from MoodyÆs and S&P, respectively.

The bullet Reg-s structured deal has a legal final maturity of 2012.

The notes are backed by a $145 million term loan facility (TLF) to the financing subsidiary of the borrower group. The TLF will rank pari passu with a separate $5 million revolving credit facility (RCF) to the borrower. The CMBS notes will rank pari passu with a cross-currency Rmb/dollar non-deliverable swap hedging the currency and interest rate risk exposure of the Issuer and a liquidity facility provided to the issuer.

Roadshows will begin with three days of investor meetings in Singapore from September 6, before heading to Hong Kong for meetings on the 11, 12 and 13. Pricing is expected in the week of September 25.
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