German Mall Valued at $371 Million May Be Sold in Debt Reshuffle

Summary: Upscale shopping mall Koe Galerie in Dusseldorf, Germany was valued at $371 million, a bit more than half of the $678 million loan underlying a CMBS.  Creditors Commerzbank AG unit and Hypothekenbank Frankfurt, as of today, have increased power over servicing the loan due to a special servicing status that was filed with the Irish Stock Exchange.  Other properties backing the same loan may be sold before April next year if the borrowers cannot refinance the loan.  Despite these problems, sales of CMBS in Europe are the highest since 2009.


London --(Businessweek.com)--
Koe Galerie, an upscale shopping center in Dusseldorf, may be sold in the next six months after attracting bids at an undisclosed price.

Further offers are expected, Koe Galerie Duesseldorf GmbH (GmbH is a company with limited liability) said at an Oct. 2 meeting, according to a filing today by a Commerzbank AG unit that manages commercial mortgage-backed securities linked to the property. Borrowers including Koe Galerie Duesseldorf won’t be able to repay a 500.4 million-euro ($678 million) loan tied to the CMBS by the Oct. 15 due date, according to the filing.

The Opera Germany (No. 2) Plc commercial-mortgage bonds, issued in December 2006 and maturing in October 2014, depend on the underlying loan for interest payments. CMBS pool cash flows from loans linked to offices, shopping centers and warehouses and package the payments into notes sold to investors. The Koe Galerie mall was valued at 274.1 million euros in March 2012, according to a filing last month.

The senior loan has been put into a process known as special servicing, according to today’s filing to the Irish Stock Exchange. That gives the Commerzbank unit, Hypothekenbank Frankfurt, increased powers to try to ensure the loan is paid so the bonds would pay out when they mature.

Other properties backing the loan may also be sold before April next year, according to today’s filing. The borrowers are seeking to refinance the loans in the first quarter of 2014.

Sales of CMBS in Europe are the highest since 2009 at more than 7 billion euros, according to data compiled by JPMorgan Chase & Co.

To contact the reporter on this story: Neil Callanan in London at ncallanan@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.nethttp://www.businessweek.com/news/2013-10-10/german-mall-valued-at-371-million-may-be-sold-in-debt-reshuffle