Angel Oak Capital Advisors recently completed a $90 million securitization backed by fix-and-flip loans in what the firm claims is the first transaction of its kind.
The underlying loan was issued by Angel Oak Prime Bridge, a direct investment real estate lender that is an affiliate of Angel Oak Capital.
Securitization structures are unique in that the terms of the underlying loans mature before the securitization terminates, so in a securitization, new loans are issued to replace the repaid loans.
The underlying loans issued by PrimeBridge to residential real estate investors have initial loan terms of six to 12 months.
Securitization, on the other hand, comes with an 18-month turnover period during which paid-up collateral is replaced with new collateral.
The average loan balance on the underlying loans is $199,052.
Srini Prabhu, co-CEO and chief investment officer at Angel Oak, said there is demand among investors for such unique products.
“Investors are attracted to this product and its unique structure. The short-term nature of the collateral, coupled with attractive yields, creates a rare opportunity in today's investment environment,” Prabhu said.
“But most importantly, investors already understand the Angel Oak story, and the quality lending expertise of our affiliated mortgage companies gives investors confidence that our securitizations are backed by loans that have been underwritten according to specific guidelines,” Prabhu added. “We believe we have one of the most diversified securitization platforms in the industry.”
This latest securitization is Angel Oak's sixth since 2015 and will bring the total amount to more than $900 million.
Robert Mulcahy, senior vice president at Primebridge, said the deal allows the company to expand its lending platform.
“Securitization allows Primebridge to expand its reach and provide capital to more real estate investors,” Mulcahy said. “This will improve the housing stock in many areas and make many communities better off.”