Exantas Capital Corp. and A10 Capital are sponsored the first CRE-CLO deals to come to the structured-finance investment market since June, securitizing nearly $700 million combined in bridge financing for commercial building projects.
Exantas is issuing $297 million in first-lien, non-investment grade commercial real estate whole loans across 32 obligors. Loans in CRE CLOs are typically bridge loans for new or refurbishment real-estate projects which lack current cash-flow proceeds to service debt obligations.
Exantas’ deal is smaller than its most recent CRE CLO transactions, and also has a little more than half-the expected weighted average life (2.86 years) of its two prior deals over the past two years. Exantas’ most recent CRE CLO was a $522.6 million transaction of loans managed by Resource Real Estate LLC.
The most recent CRE CLO to price in the market was June’s $820 million MF1 2020-FL3 transaction managed byMF1 REIT II LLC.
Deal volume is down this year to $4.1 billion across eight transactions, compared to a post-crisis record of $15.74 billion in 2019 (per Finsight.com).
The borrowers collectively provide lower-rated, speculative-grade assets for the portfolio. The weighted average ratings factor for Exantas Capital Corp. 2020-RSO9 is the equivalent of low-B/triple-C ratings, according to Moody’s Investors Service. (Nearly 85% are considered “Caa1” obligations by Moody’s).
The top five asset types securing the loans are multifamily (50%), self-storage (14.3%), office (13.7%), retail (8.7%) and manufactured housing (6.8%) properties.
The portfolio has a weighted average life of 2.86 years, with a WA spread of 3.64%.
Wells Fargo, Barclays and JPMorgan are underwriters of the deal. The deal has no reinvestment period.
Exantas’ deal includes seven classes of notes receiving principal and interest payments in a collateralized loan obligation payment structure. The deal includes a Class A tranche of notes totaling $158.9 million with preliminary triple-A ratings from Moody’s and DBRS Morningstar.
Exantas, which had $1.7 billion in assets under management as of June, has issued and managed ten prior CRE CLOs totaling about $4.3 billion.
The $400 million A10 Bridge Asset Financing 2020-C is the 8thCRE CLO for A10 Capital, with a portfolio of 35 obligors being underwritten by Deutsche Bank.
The WAL of the transaction is 3.46 years, with a noncall period ending October 2022. Most of the projects involve retail (38.2%) and office (30.3%) properties.
As of Aug. 10, A10 had originated $3.7 billion of loans representing 480 obligors. It’s total assets under management was unavailable.
Both DBRS Morningstar and Moody’s assigned early triple-A ratings to the senior notes, a $232 million Class A tranche with an assumed coupon of 2.03%.
