Alterna Tax Asset Group plans to issue $101 million of securities backed by property tax lien certificates from municipalities within the states of Florida, Illinois, Maryland, New Jersey and New York.
The deal, Alterna Funding I, LLC, is a first for the issuer. Kroll Bond Ratings has assigned preliminary AAA’ ratings to the notes, which mature on Feb. 15, 2021.
Guggenheim Securities is lead manager on the deal.
The initial pool includes approximately $85.2 million of property tax lien certificates as of June 30, 2014, according to KBRA. The weighted average age of the pool is approximately 15.3 months and the weighted average lien to value is approximately 8.4%.
Up to $15.15 million of new tax liens on new properties may be added to the pool during the first six months of the transaction. These purchases will be made from an account that will be funded at closing from note proceeds. The transaction also features an account totaling $5.0 million at closing to purchase subsequent tax liens on properties already subject to tax liens in the initial pool, as well as subsequent liens on properties purchased via the new tax lien account.
Alterna Tax Asset Group was founded in 2007 and began purchasing property tax liens in 2009. Over the past five years, it has acquired approximately $270 million of tax liens linked to over 39,000 properties in over 250 jurisdictions, located across 10 states and the District of Columbia.
Historically, over 50.0% of the tax liens were redeemed within 12 months, while over 90.0% have been redeemed within three years of purchase. Out of Alterna’s more than 39,000 tax lien purchases, only 22 properties have become real-estate-owned. Only one of the 22 REO properties was located in a jurisdiction included in the securitization.