VIUM Capital and its joint-venture partner Merchants Bancorp (Nasdaq: MBIN) have completed a securitization involving over $1.1 billion in skilled nursing and senior housing bridge loans, in a transaction that the firms tout as a first for the sector.
“[This deal] will transfer the credit risk on the tranche of those loans to … outside investors and institutional groups,” Steve Kennedy, executive managing director at VIUM, told Skilled Nursing News. “That’s going to allow us to expand our capacity a little bit, and we envision … this is a product we can utilize.”
VIUM is based out of Columbus, Ohio and has regional offices in Austin, Texas and Boca Raton, Florida.
For the transaction, Merchants issued and sold $158 million aggregate principal balance of Senior Credit Linked Notes representing approximately 14% of the reference pool. Merchants wholly owned subsidiary, Merchants Capital Corp., will continue to service the loans, Kennedy said.
“The attraction [for investors] right now is you’ve got capital looking for yield. We’re not a group that’s underwriting crazy credits,” Kennedy told Skilled Nursing News. “We’re not doing big turnarounds or new construction, really. So, if you look at our bridge portfolio, you’re saying here’s a portfolio of cash flowing, positive debt service coverage deals.”
VIUM Co-Founder and Executive Managing Director Kass Matt said the portfolio produces solid debt service coverage as the loans season for permanent financing through HUD or the GSE’s.
“This is a repeatable structure that will be another tool to ensure we continue to provide reliable, cost-effective, term-favorable capital to our healthcare and seniors housing clients,” Matt said in a press release.
The company reported that the transaction follows a record year for VIUM where it closed 70 transactions totaling $2.1 billion and ranked as a top three HUD healthcare lender in both dollar and transaction volume. The firm has funded over $3.5 billion in debt financing across 30 states since it launched just three years ago.
“’This securitization is a novel capital markets solution that further enables us to continue to lean into the healthcare and seniors housing real estate market as a reliable, leading lender,” Kennedy said in a press release. “It’s the first credit-risk transfer securitization of its kind in our industry, exemplifying the capital creativity that is at the foundation of our company.”
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