Oaktree Capital Group plans to issue $260.5 million of securities backed by a pool of 1,151 non-performing loans and real estate-owned commercial properties, according to a Kroll Bond Ratings presale report.

The deal, Oaktree Real Estate Investments/Sabal, Series 2013-LV2, is structured with a $201.47 million ‘BBB-’ rated class A note and an equity tranche worth $50.12 million that has not been rated by Kroll.

The assets included in the pool were acquired by certain private investment funds managed by Oaktree Capital Management from seven financial institutions for $340.8 million, and have an aggregate unpaid principal balance of $739.8 million. 

Sabal Financial Group, L.P., which is an affiliate of Oaktree, will service the deal and Wells Fargo is lead manager on the deal.

The transaction is structured as a liquidation vehicle that uses recoveries from the assets to pay the rated notes.  The underlying collateral is comprised of commercial and multifamily real estate properties (60.6% of acquisition basis), land (25.3%), residential assets that are primarily commercial loans (12.3%), and other collateral (2.4%).

Most of the collateral is located in the southeastern United States.  The top-three state exposures include Georgia (22.2%), Florida (13.7%), and South Carolina (12.1%).   

Oaktree announced in May that it launched the Oaktree Real Estate Debt Fund with a target of $500 million in capital commitments. The fund invests in a diversified portfolio of real estate debt instruments, including commercial mortgage backed securities, commercial first mortgages, subordinated secured debt, mezzanine loans, corporate debt and residential first mortgage pools.


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