Prime Finance, a seasoned sponsor of six prior commercial real estate CLO deals, is marketing a seventh deal that is slated to be the largest structured-finance transaction backed by transitional or non-stabilized properties in over a year.
PFP 2021-7 is a $1 billion CRE collateralized loan obligation, which will pool 27 interest-only whole loans totaling $738.9 million and provide $263.1 million in cash collateral for upcoming acquisitions of nine pre-identified, delayed-close loans for 90 days past closing.
The transaction includes a $571.14 million Class A tranche with expected AAA ratings from Kroll Bond Rating Agency.
Nearly half of the loans (48.8%) are for multi-family properties, followed by office type (26.1%), industrial (13.2%), mixed-use (6.3%) and retail (3.7%).
The deal includes a three-year acquisition period that can be used to acquire only pari passu and currently unfunded companion participations related to the original assets, according to a report from Kroll. Kroll notes the deal is highly leveraged with an estimated in-trust loan-to-value ratio of 131% (compared to the 124.7% average for 18 CRE CLO transactions rated by Kroll since January 2019).
Nearly all of the loans were originated by affiliates of Prime; a majority of the loans were for property acquisitions (26, 72.6%), with the remainder for refinance.
As of Jan. 2021, all of the loans were current on debt service.
According to market data, PFP 2021-7 is the largest CRE CLO offering since The Blackstone Group’s $1.24 billion BXMT 2020-FL2 transaction in January 2020.
Wells Fargo is the sole structuring agent.
Prime Finance is the private commercial real estate finance investment arm of Prime Group, which owns and manages over $11.5 billion in assets as of December 2020, according to Kroll.
