Land Securities, Europe’s largest Real Estate Investment Trust, is hoping to securitise a major London property using Commercial Mortgage-Backed Securities (CMBS).
The move would raise around £360 million on the office space at Queen Anne’s Gate, Westminster, which is currently let by the Home Office.
The securitisation is surprising because CMBS have all but disappeared over the last couple of years, having played a major role in the credit crunch.
Banks packaged mortgages and sold them on as investments, but then interest rates rose and mortgages holders began to default. Investors were saddled with vast but unknown debts, spreading chaos throughout first the financial system and then the wider economy. However, Land Sec’s deal will be considerably less complex than the CMBS so popular until recently.
Last month, Tesco issued the first CMBS since 2007, and Land Sec’s securitisation supports predictions of the mortgage-backed security’s return to the property market.