Harvest Commercial Capital, LLC (“HCC”), the nationwide non-bank leader in owner-occupied small balance commercial real estate loans, securitized $266.6 million of first-lien, SBA 504 and conventional fixed rate commercial real estate loans that the company references as HCCLT 2019-1. The transaction was co-lead managed by Barclays Capital and Credit Suisse Securities.
Kroll Bond Rating Agency (“KRBA”) assigned a “AAA” rating to the most senior certificates along with ratings ranging from AA to B on 5 other classes of certificates. The closing of this transaction represents the first securitization of predominately owner-user small balance commercial loans in over 12 years.
HCC leaders Adam Seery, Evan Mitnick and Todd Massas shared their excitement, “With the closing of the HCCLT 2019-1 transaction, HCC has set a new benchmark for securitizations of owner-occupied commercial real estate loans. Strong investor interest in the deal demonstrated the high level of appetite for this asset class. This transaction is a testament to the strong work environment at Harvest and to the unbelievable amount of effort it took to get this done. We have an exceptional team!” HCC plans to be a regular issuer moving forward.
HCCLT 2019-1 is a $266.6 million securitization collateralized by 191 small balance commercial mortgage loans, primarily made to small business concerns and secured by owner-occupied commercial real estate properties. The majority of the loans (140 loans, 75.7% of the total pool balance) were recently originated by Harvest Commercial Capital, LLC in conjunction with the firm’s Conventional (86, 53.0%) and 504 (54, 22.8%) programs, while the remaining loans (51, 24.3%) were purchased in a portfolio acquisition of collateral previously securitized in a 2006 General Electric Capital Corporation (“GECC”) transaction.
With the exception of seven floating-rate loans (3.5%), the pool is comprised of fixed rate mortgages. It should be noted that 138 (75.2%) of the 184 fixed rate loans provide for a single adjustment to the interest rate after the 60th mortgage payment, in each case following an initial fixed-rate period, that does not adjust thereafter. The loans have an average outstanding principal balance of $1.4 million. The pool has a weighted average loan to value ratio of 51.4% based on third party appraisals (HCC loans) and broker price opinion data (GECC loans). FICO scores were provided for all of the HCC loans, with a weighted average FICO score of 727.
Harvest Commercial Capital, LLC
Harvest Commercial Capital, LLC is a Delaware limited liability company that originates, owns, sells and services first-lien small balance commercial loans backed generally by multi-purpose commercial real estate. HCC originates conventional loans and first-lien loans pursuant to the U.S. Small Business Administration’s (“SBA”) 504 loan program. HCC is majority owned by an affiliate of Medalist Partners, LP, an SEC registered investment manager with approximately $2.7 billion of assets under management across strategies in asset-backed private credit, structured credit and CLOs. HCC was founded in February 2016 and is based in Laguna Hills, CA.