Case study: Fleet Street Finance Two

Author: | Published: 5 Mar 2010

When German retail group Arcandor went into administration, the payments owed on four tranches of CMBS notes structured under UK law were under threat.

Here, t
he lawyers involved explain how, for the first time, they extended the maturity of both the loan and notes, and why bondholders agreed to the new terms.

In 2006 Goldman Sachs granted a loan to German partnership Highstreet. This was then securitised in a classic commercial mortgage-backed securitisation (CMBS) called Fleet Street Finance Two, which had a pool of assets that comprised the wide portfolio of commercial property in Germany let to the Arcandor Group.

The single tenant meant that the only source of payment on the loan came from the rent payments from Arcandor’s two retail companies – Karstadt and Quelle. So payments on the securitised notes issued by Goldman were wholly dependent on the continued health of those tenants.

As with...