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Hybrid CMBS: A short stay at Center Parcs

Center Parcs points to the impact that growing private equity ownership is likely to have on CMBS structures.

Any potential issuer looking for evidence of how the hybrid CMBS/whole-business market is changing need look no further than UK holiday park operator Center Parcs’ recently launched deal. This is understood to be the third time that the company has looked at a securitization – and it looks like being third time lucky. It was originally considered as early as 2000 and revisited just before Center Parcs was acquired by Blackstone Group last year. The deal that has finally emerged is a £750 million ($1.49 billion) issue arranged by Merrill Lynch with a remarkably short duration of just over four years. This takes the traditional concept of whole-business securitization to a new level: it is a leveraged finance deal for a private equity buyer looking for an exit.

The deal – CPUK Mortgage Finance – securitizes a single loan originated by Merrill, Citi and RBS, which is backed by four holiday parks. There is a £282 million B note underneath the securitization. The £260 million A1 tranche has been rated triple A by Moody’s, Standard & Poor’s and DBRS but the £190 million A2 tranche – also triple-A – is only rated by S&P and newcomer DBRS.

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