Cazenovia Creek Investment Management is planning a $158.75 million securitization of tax liens, according to Kroll Bond Rating Agency.

The transaction will be the company’s first term securitization.

Cazenovia Creek Funding I, Series 2015-1 offers $150.5 million senior class A notes that are rated ‘AAA’ by Kroll. At the subordinate level, there are $8.25 million of class B notes rated ‘A.’ Both tranches are set to mature December 10, 2023.

There will also be $4.5 million set aside at closing that may be used to purchase tax liens of new properties, and another $2 million to purchase additional liens on properties backing liens on the original pool.

MTAG Services LLC is servicing the transaction; Guggenheim Securities is the sole structuring advisor and bookrunner. Capital One Securities is serving as a co-manager for the deal.

The transaction is collateralized by a poll of municipal tax liens from 40, 652 properties located throughout eight states, with Florida (46.9%), Tennessee (16.9%), and Illinois (14.1%) being the states with the highest concentrations of properties. The pool has an average redemptive value of $3,816. Residential properties comprise 58.4% of the pool, while commercial properties and vacant land represent 34.6% and 6.2%, respectively.

Kroll cites the low lien-to-value ratio (5.1%) as a key strength of the deal. The rating agency also considers Caz Creek to be an experienced purchaser, as it has managed over 170,000 tax liens. The company has experienced less than 0.01% loss on its tax lien portfolio.

The additional lien account presents key risks to the deal, according to Kroll; the issuer can purchase up to $47.6 million of tax liens on new properties, which could impact the LTV and property concentration of the overall pool.  Up to $15 million of new liens can be purchase each month through December 2016; after that the limit falls to $10 million per month through 2017.

CazCreek was founded in 2011 and is based in Charlotte, NC. Since the company’s origination, it has acquired more than $579 million of tax liens from over a dozen states. According to Kroll, the company has limited historical losses and a low incidence of foreclosure.  

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