Credit Suisse Said to Lead Banks Funding America’s Largest Mall

Jun 19, 2014 12:15 pm ET

June 19 (Bloomberg) -- A group of Wall Street banks are vying to lend $1.4 billion to the owner of the biggest U.S. shopping mall.

Credit Suisse Group AG, Citigroup Inc. and Wells Fargo & Co. are poised to fund the 4.2 million-square foot Mall of America in Bloomington, Minnesota, according to three people with knowledge of the matter who asked not to be identified because negotiations are private. Switzerland’s second-biggest bank is financing more than half of the mortgage, which will be sliced into bonds and sold to investors, the people said.

The deal is the latest example of lenders competing for plum lending assignments linked to commercial properties across the U.S. Borrowers are benefiting as banks, insurers and foreign investors pour cash into real estate amid a global search for yield, enabling landlords to pay off debt early and lock in low rates.

Representatives from Credit Suisse, Citigroup and Wells Fargo declined to comment.

Triple Five Group, the Edmonton, Alberta-based development company that owns the Mall of America, plans to use the new 12- year loan to pay off $775 million in existing debt, the people said. The current mortgage, originated in 2006, doesn’t mature until December 2016, according to data compiled by Bloomberg.

A representative from Triple Five couldn’t immediately be reached.

Loosening Terms

Firms that write property loans to be bundled into commercial-mortgage backed securities are being stymied by stiff competition. They’re loosening terms to win business as issuance fails to keep pace with projections made after sales of bonds doubled to $80 billion last year. Bank of America Corp. analysts last month cut their 2014 issuance forecast by $20 billion to $60 billion.

Wall Street banks are chasing large loans like those for the Mall of America to meet origination targets. Deutsche Bank AG, the top underwriter of U.S. CMBS offerings, is marketing a $1.4 billion transaction this week linked to a group of Hawaiian hotels. The lender beat out Credit Suisse, JPMorgan Chase & Co. and Citigroup to get the deal.

The Mall of America, dubbed the Hollywood of the Midwest on its website, has more than 500 stores and a children’s theme park. The complex, which could hold seven Yankee Stadiums, gets more than 40 million visitors annually, including one-third traveling for more than 150 miles, according to Triple Five’s website.

The property, built in 1992, was valued at $1 billion in 2006, Bloomberg data show.