Greystone returns with $450 million CLO secured by commercial real estate

Greystone 2021-HC2 is preparing to launch a $450 million Secured Loan Obligation (CLO) secured by 27 entire Commercial Healthcare Real Estate (CRE) loans.

The underlying property types are concentrated in facilities that help the elderly, according to a pre-sale report from ratings agency Kroll Bond. Skilled nursing properties make up the majority of the portfolio at 51.9%, followed by assisted living (16.3%), assisted living and memory care (11.4%), assisted and skilled nursing (9.2%) and assisted living (7.3%). %) to complete the five main property subtypes.

JP Morgan Securities, Goldman Sachs & Co., Wells Fargo Securities and UBS Securities are placement agents on the deal, according to KBRA.

Among the key structural features of the transaction is a start-up period of 180 days, during which $46.5 million in cash can be used. This is below the average of 17.6% cash available for use among 14 other CRE CLO transactions that KBRA has rated over the past 12 months.

The transaction also has a reinvestment period of 36 months. Any reinvestment asset chosen for the trust must be a healthcare property and, at inception, must be intended to be refinanced with the proceeds of an agency mortgage.

The KBRA notes that this type of reinvestment feature can lead to negative credit migration and increased concentration over the term of the securitization, which can be a credit challenge.

KBRA plans to assign “AAA” ratings to classes A and AS, which will issue $183.3 million and $15.7 million in notes, respectively. Class A has 59.2% subordination and Class AS has 55.7%, KBRA said.

Throughout the rest of the chord, the notes should be given notes ranging from “AA-” to “B-“.

Twenty-six sponsors are behind the Greystone transaction, and the 37 properties have an initial weighted average remaining life of one year. The loan-to-value ratio of appraisals on the properties is approximately 76.1% on a fully funded basis, and the transaction has an issuer debt service coverage ratio of 1.64x, according to the KBRA.

The majority of loans, 92.9%, have extension options that can be exercised provided certain conditions specified in the loan documents are met.

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