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Goldman Sachs markets 1st European green CMBS deal

A unit of Goldman Sachs Group Inc. is marketing the first-ever European green commercial mortgage-backed securities transaction, structured around a €196.2 million loan to acquire an office property in a Paris suburb.

The floating-rate loan, from Goldman Sachs International Bank, is intended to facilitate the acquisition of the campus-style River Ouest property, in Bezons, France, by a group of investors led by LRC Real Estate Ltd., according to a presale report from DBRS Morningstar. The seller group is led by AEW and includes CDC, Predica and Scor.

The transaction is expected to comply with the International Capital Market Association's green bond principles.

In the first-ever green CMBS deal, in 2017, Natixis issued a $72 million green-specific tranche to refinance part of a $358.6 million mortgage loan the firm provided to Ivanhoé Cambridge Inc. for the acquisition of 85 Broad St. in New York City. The green CMBS transactions so far have been structured around a single asset and single borrower, and industry participants have debated whether a green deal is possible in the conduit CMBS space, in which multiple loans are bundled together and securitized.

To satisfy EU and U.S. risk-retention rules for the so-called River Green Finance 2020 transaction, Goldman Sachs is expected to retain an approximately €9.8 million issuer loan that is intended to constitute a vertical interest of at least 5% in the transaction.

The River Ouest property was awarded a Building Research Establishment Environmental Assessment Method "very good" certificate in 2017 — the assessment's third-highest ranking — and the independent analytics firm Sustainalytics has reviewed the transaction's green bond framework and concluded that it is aligned with ICMA principles. The property is required to keep the BREEAM certification or a similar designation while the bonds are outstanding.