Värde Partners, a leading global alternative investment firm, announced the closing of a commercial real estate collateralized loan obligation (CRE CLO). This is the firm’s fourth and largest CRE CLO, and eighth securitization of commercial real estate collateral.
The asset pool has an aggregate initial principal balance of $928 million and consists of 23 floating-rate mortgages secured by 29 commercial properties. Värde offered $759 million of bonds rated AAA through BBB-.
The underlying loans were originated by Värde through its commercial real estate lending platform and comprise a diversified portfolio of transitional, value-add, and event-driven commercial, hospitality, and multifamily mortgage loans across the United States. The properties span nine states and the District of Columbia with an average principal balance of approximately $40 million.
“The close of Värde’s latest CRE CLO demonstrates the strength of our origination platform and our position as a leading investor in U.S. commercial real estate financing markets. We believe the quality of our underwriting is further supported by the fact that none of the pre-Covid collateral required modifications. We are pleased with the continued support from capital market investors for our firm. This transaction allows us to further expand our lending platform, providing borrowers with flexible solutions and reliable capital,” said Brian Schmidt, Partner and Head of Mortgages and North America Real Estate at Värde.
Expanding on the post-Covid environment and opportunity set, Jim Dunbar, Senior Managing Director at Värde, added: “We are at the beginning of a CRE CapEx cycle and we believe the nearly $4 trillion U.S. commercial real estate market presents a massive opportunity with favorable supply/demand dynamics. Covid has accelerated a number of trends that are driving tenants to rethink how they utilize space and landlords to consider how they can improve their properties to attract tenants. Värde is well-positioned to support this area of transitional lending, seeking to help borrowers achieve their business plans through renovations, repositioning, or navigating liquidity as markets recover.”
Värde has 27 years of experience investing in real estate and credit markets and has originated over $3 billion in commercial real estate loans since 2017. The firm has a dedicated team of experienced originators, asset management and capital markets professionals. Through its commercial real estate lending program, Värde is a non-recourse, balance sheet lender financing all major asset classes, plus mixed-use and self-storage.
Värde closed its most recent CRE CLO in October 2019, backed by 24 mortgages with an aggregate principal balance of $628 million. In addition, Värde closed CRE CLOs in February 2018, with an aggregate principal balance of $368 million backed by 25 mortgages, and in November 2018 with an aggregate principal balance of $458 million backed by 25 mortgages.