Värde Partners, a leading global alternative investment firm, closed the first commercial real estate collateralized loan obligation (CRE CLO) to be entirely hotel-backed. This is Värde’s fifth CRE CLO, and ninth securitization of commercial real estate collateral.
The underlying loans were originated by Värde’s commercial real estate lending platform, through which the firm has funded more than $1 billion of real estate loans in the hospitality sector in 2021.
The securitization’s asset pool has an aggregate initial principal balance of $527 million and consists of 10 floating-rate mortgages secured by 11 full-service hospitality properties. The properties span nine states with an average principal balance of approximately $53 million. Värde offered $208 million of AAA rated bonds and $187 million of non-rated bonds.
“Värde’s strategy for this offering is based on our fundamental view of the hotel industry’s recovery over a two- to four-year period, which we expect will differ across markets and asset types. By applying a robust underwriting process to evaluate market dynamics, geographic trends, and sponsor quality on a deal-by-deal basis, we have been able to package in this transaction what we view to be a highly attractive collection of properties,” said Jim Dunbar, Senior Managing Director at Värde. “This transaction allows us to further expand our lending platform, providing additional borrowers with flexible, reliable and much-needed capital in this challenging environment while underscoring the strength of the CRE CLO market and the heightened demand for alternative lenders.”
Värde has 28 years of experience investing in real estate and credit markets and has originated over $5 billion in commercial real estate loans since 2017. The firm has a dedicated team of experienced origination, 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 focuses on providing flexible capital and certainty of execution to meet the needs of experienced real estate investors.
In May, Värde closed its fourth and largest CRE CLO at $928 million. The asset pool consisted of 23 floating-rate mortgages secured by 29 commercial properties. The firm has a clean securitization track record, having experienced zero losses to date, no overcollateralization test breaches, and five of its nine securitizations successfully paid off.