ORIX Corporation USA (ORIX USA), the U.S. operating division of global financial services firm ORIX Corporation (ORIX), announced the closing of OREC 2018-CRE1, a $350 million commercial real estate (CRE) collateralized loan obligation (CLO). Initially backed by a portfolio of 23 loans secured predominantly by newly constructed properties, the CLO includes many loans originated for agency takeout through one of ORIX USA’s wholly owned affiliates. The CRE CLO is a natural extension of ORIX USA’s comprehensive platform, with a fully integrated asset management and servicing group.
The initial pool consists of $299.4 million in existing commercial mortgages that were originated between 2014 and 2018 (12 in the past year), plus a $50.6 million funded reserve for assets to be acquired during the 120-day ramp-up period. Following closing, there is a 2 1/2-year reinvestment period. The majority of the assets are in a pre-stabilization phase awaiting refinancing through a permanent agency takeout loan through Fannie Mae, Freddie Mac or the Federal Housing Administration (FHA).
“Three wholly owned ORIX USA affiliates contributed to our first managed commercial real estate CLO, leveraging ORIX USA’s 35 years of capital markets knowledge and commercial real estate industry expertise,” said Hideto Nishitani, ORIX USA chairman, president and CEO. “RED Capital Group, ORIX Real Estate Americas and Lancaster Pollard each originated loans for the CLO. Several loans were originated by RED Capital Group to drive business at another wholly owned affiliate, Boston Financial Investment Management, reinforcing our commitment to the affordable and seniors housing sectors. Given ORIX USA’s wherewithal, we elected to retain the AA rated through the nonrated income notes on our balance sheet and offer only the AAA-rated class.”
All of the loans are serviced by RED Mortgage Capital. Seven classes of notes were issued; however, the only offered class of notes was the $190.3 million Class A notes, which were rated Aaa(sf) and AAA(sf) by Moody’s Investors Service Inc. and Kroll Bond Rating Agency Inc., respectively. The Class A notes benefit from 45.625 percent credit enhancement at closing and priced at a coupon of 118 basis points over one-month LIBOR.
Fourteen of the loans representing 62.3 percent of the initial collateral pool are backed by multifamily properties, which include residential and student housing properties. Four of the loans comprising 17.1 percent of the initial collateral pool are secured by private-pay senior assisted living facilities, with most of these assets anticipated to be permanently financed by Fannie Mae or FHA through an ORIX affiliate in the future. In addition to multifamily properties, the initial collateral pool also contains loans backed by self-storage, retail and one hotel with a stabilized appraised loan to value of only 40.3 percent.
J.P. Morgan Securities LLC acted as sole structuring agent and lead placement agent for the transaction. Wells Fargo Securities LLC served as co-lead manager, and Citi acted as co-manager for the offering.
ORIX Corporation USA (ORIX USA)
Since 1981, ORIX USA has provided innovative capital solutions that clients need to propel their business to the next level. ORIX USA and its subsidiaries—Boston Financial Investment Management, Lancaster Pollard, NXT Capital, Mariner Investment Group, RB Capital and RED Capital Group—include a team of more than 1,000 employees spanning 30+ offices across the U.S. and Brazil. ORIX USA and its family of companies have $63 billion of assets under management, administration and servicing (including more than $10 billion held by the company and its subsidiaries). Its parent company, ORIX Corporation, is a publicly owned international financial services company with operations in 38 countries and regions worldwide. ORIX Corporation is listed on the Tokyo Stock Exchange (8591) and New York Stock Exchange (IX). For more information on ORIX USA, visit www.orix.com.
Lancaster Pollard helps healthcare and senior living providers expand and improve their services by providing a full range of investment banking, mortgage banking, private equity, balance sheet financing and M&A advisory services. Lancaster Pollard & Co. LLC, a registered broker/dealer, underwrites taxable and tax-exempt bonds, and provides debt placement and syndication, as well as M&A advisory services. Lancaster Pollard Mortgage Company originates, underwrites and services mortgage loans insured or guaranteed by governmental agencies. Lancaster Pollard Finance Co. LLC provides balance sheet financing. The Propero™ Seniors Housing Equity Fund LLC provides equity financing for the new development and acquisition of seniors housing and care properties. Lancaster Pollard has provided over $20 billion in debt and equity capital since its inception and its mortgage servicing portfolio exceeds $8.6 billion. The firm’s home office is in Columbus, Ohio, and it has regional banking offices in Atlanta, Ga; Austin; Bozeman, Mont.; Chicago, Ill.; Denver, Colo.; Kansas City, Kan.; Minneapolis, Minn.; Newport Beach, Calif.; and Philadelphia, Pa. For more information, visit www.lancasterpollard.com.
RED CAPITAL GROUP LLC
Recognized for its industry expertise, innovative and comprehensive structures, and consistently high rankings, RED Capital Group has provided over $78 billion of integrated debt and equity capital since 1990, with a focus on the multifamily and affordable housing industries.
RED Mortgage Capital is a division of ORIX Real Estate Capital LLC, a Fannie Mae DUS®, MAP- and Lean-approved FHA, and Freddie Mac small balance lender. ORIX Real Estate Capital Holdings LLC is headquartered in Columbus, Ohio, and is a wholly owned subsidiary of ORIX Corporation USA. ORIX Real Estate Capital has 16 offices nationwide and approximately 330 employees. Securities, investment banking and advisory services are provided through OREC Securities LLC, member FINRA/SIPC. For more information on RED Capital Group LLC, visit http://www.redcapitalgroup.com.
Boston Financial Investment Management
Boston Financial Investment Management (Boston Financial) is a national leader in the Low-Income Housing Tax Credit (LIHTC) industry, with a proven track record in syndication services as well as asset and portfolio management. Since 1969, Boston Financial has raised and managed over $11 billion of low-income housing and historic tax credit equity investments in over 2,400 properties, making Boston Financial one of the largest firms in the tax credit industry. For more information on Boston Financial, visit www.bfim.com.
This press release is for informational purposes only. It shall not constitute an offer to sell or a solicitation of an offer to buy any securities.