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LONDON-NM Rothschild and Merrill Lynch have sealed an agreement to originate loans for a euro 736-million (877-million) CMBS, aimed for the first half of next year. The move follows the news that Rothschild had arranged a euro 1.47-billion ($1.75-billion) securitization for specialist retail park fund Hercules Unit Trust. Merrill Lynch and HSBC sold the property-backed bonds.

Both investment banks operate their own multi-borrower conduits to process loans but now plan together to market a tranche of loans for next year’s bond issue. Together they have already secured a pipeline of deals of around euro 368 million ($438.71 million) each.

The new vehicle will be branded jointly under Merrill’s Taurus and Rothschild’s REC conduit. Andrew Radkiewicz, head of real estate markets at Rothschild, says the deal was part of the bank’s three-pronged strategy that includes arranging large single-client CMBS deals as well as conduit lending.

The bank has also pioneered the use of its balance sheet to provide equity bridging finance for clients, such as funds, that need cash to buy property before they have sold units to investors. Clients for this service have included Protego, AIM and Rock Capital Group.

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