The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

CMBS: Leisure assets prove hard work

With Hoteloc still ringing in the market’s ears, Deutsche Bank’s conduit trips up on its pub valuations.

In mid-April, Standard & Poor’s announced that it had placed the D and E tranches of Deutsche Bank’s DECO Series 2005-UK Conduit 1 deal on creditwatch negative because of problems with the valuations of some of the properties backing the deal. A quick glance at the assets reveals that 25% of the initial pool was made up of hotel and leisure-related properties – which should have been enough to ring alarm bells given that sector’s track record in the securitization market. But the problem this time is actually pubs – a business that has been happily linked to ABS since the Guy Hands heyday of the early 1990s.

The problems centre on three pubs in Scotland that were financed via a £2.1 million ($4.2 million) loan that has been in special servicing since December. It appears that the initial valuations in the deal were pretty aggressive, and the vacant possession valuation of the properties is now 203% LTV (two of the tenants are in administration and the third is bankrupt). The fact that this deal has run into trouble is slightly ironic as when it was launched it was hailed as bringing more granular, diversified US-style conduit CMBS to Europe: the pool comprises 23 loans and 45 properties.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree