(Bloomberg News) Deutsche Bank AG, UBS AG and JPMorgan Chase & Co. are preparing the year's first bond sales tied to commercial property loans, according to people familiar with the transactions.

Deutsche Bank and UBS are teaming up to issue as much as $2.5 billion in commercial mortgage-backed securities linked to loans on office buildings, shopping malls and hotels in what would be the largest offering of its kind since the market froze in June 2008, according to a person familiar with the deal. JPMorgan plans to sell $1.5 billion in similar debt, a person familiar with that sale said.

Wall Street banks are building a pipeline of property loans to package into bonds as investors seek higher yields while the Federal Reserve holds its benchmark interest rate near zero. Sales of securities backed by mortgages on commercial property may quadruple to $45 billion in 2011, according to JPMorgan. Issuance plunged to $3.4 billion in 2009 after the credit markets seized during the financial crisis.

"CMBS new issue still offers attractive returns relative to other fixed-income products," said Andrew Solomon, a managing director at Angelo Gordon & Co. in New York. "Even with new issuance picking up steam, the net supply of CMBS is still shrinking while demand is increasing. I'm pretty sure that means spreads are going to continue tightening."

Both the Deutsche Bank and UBS transaction and the JPMorgan offering are slated for next month.

Yields Fall

Top-rated securities tied to commercial mortgages yield 2.25 percentage points more than the benchmark swap rate, compared with 3.95 percentage points a year ago, according to a Barclays Plc index. The spread was as high as 12.4 percentage points in March 2009 as investors fled to the safety of U.S. government debt amid uncertainty over how policy makers would resolve the financial crisis.

Other banks lining up debt sales linked to commercial real estate include Morgan Stanley, Bank of America Corp., Goldman Sachs Group Inc., Royal Bank of Scotland Plc and Wells Fargo & Co., people familiar with the plans said.

Sales of commercial mortgage-backed securities are a boon for property owners that have struggled to refinance maturing loans amid a dearth of new lending. About $61.3 billion in property loans packaged into bonds comes due in 2011, according to JPMorgan.

Renee Calabro, a spokeswoman at Deutsche Bank, declined to comment, as did Jennifer Zuccarelli at JPMorgan; Kris Kagel at UBS; Mark Lake at Morgan Stanley; Ed Canaday at Goldman Sachs; Danielle Robinson at Bank of America; and Michael Geller at RBS.

Elise Wilkinson at Wells Fargo didn't immediately return a telephone call seeking comment.