Bank of America is moving ahead with a $460 million CMBS transaction of assets related to Fortress Investment's 2007 acquisition of Flagler Development Group, according to market reports.
The $650 million deal, which is larger than the above disclosed amount because it includes mezzanine debt to be sold in advance of the securitization, will not be issued under the Federal Reserve’s Term Asset-Backed Lending Facility (TALF) program.
The transaction is backed by mortgages on office and industrial properties in Florida. The bank is shopping about $236 million of mezzanine debt in advance of the securitization, which it hopes to complete by the end of November. Approximately $435 million of the deal will be senior debt.
About $50 million of the mezzanine debt will be securitized as a 'BBB-' bond, with a yield of about 9% to 9.5%. The remainder of the mezzanine will be split between an $85 million mezzanine A tranche and a roughly $100 million mezzanine B tranche.
Fortress acquired Flagler Development via its acquisition of Florida East Coast Industries. At the time, Bank of America, Citigroup and Bear Stearns provided $1.6 billion of mortgage debt.
Fortress will use proceeds from the securitization to refinance the original mortgage. The Bear Stearns portion of the mortgage was assumed by the government while Citi has sold the majority of its stake.