There’s a lot of reasons to structure a large loan destined for securitization as a mortgage in part and a mezzanine loan in part.  Sometimes it’s simply that the borrower is needy while the capital markets are charry.  In that case, the lender whacks up the credit into a mortgage loan for SASB execution and assumes (hopes) there’s someone out there with sufficient acumen, optimism or naivete to buy the mezzanine loan.  But sometimes, there are other reasons to divide a loan into a mortgage and mezz.
Continue Reading SASB: The (Shotgun?) Marriage of Mortgage and Mezz

Here at Dechert, we have market-leading practices in CRE CLO as well as corporate CLOs, including broadly syndicated and middle market structures.  So, every day that I peer into these two alternate universes, I’m astonished at how different these two fundamentally similar leverage technologies really are.  Certainly, even at a modest remove, they look pretty much the same.  A sponsor is looking for match term leverage and has developed a healthy disquietude about the mark to marketness of the repo market and has read CrunchedCredit assiduously and understands that portfolio lenders need multiple modalities of leverage.  Said well-educated sponsor conveys financial assets into a securitization vehicle which issues time and ratings tranched debt to a wide range of investors seeking exposure to the space in a more liquid and more focused risk/yield return way.  Tada!
Continue Reading A Modest Proposal: Why Can’t CRE CLOs Be More Like Corporate CLOs?

The courts have been busy this year, handing down several key decisions which have affected the structured finance landscape.  Among them are Omnicare, Ace Securities and Madden.  In the grand tradition of the Golden Turkey Awards due out later this month (and without stealing any of their thunder), this post is a quick review of these important cases.
Continue Reading Three Important Structured Finance Court Decisions of 2015