Grant Street Funding has raised another $500 million through a variable-note transaction, a type of commercial mortgage securitization that issues notes before the collateral loans are originated.
The private placement, which will be used to finance five-year, fixed-rate loans, closed on Oct. 31 (GSF 2023-1). Deutsche Bank ran the books on the deal, and Fitch graded the bonds AAA to BB- using its CRE CLO methodology.
It’s the third variable-note transaction that Dallas-based Grant Street has issued since February 2021. The vehicles resemble funds or separate accounts, in that Grant Street gains investor commitments based on agreed-upon pricing parameters and other terms before the notes are issued. The issuer then draws on those capital commitments as loans are originated. Grant Street retains a piece of the deals and services the loans.
For the latest deal, Grant Street drew commitments from lead investors Axonic Capital and Medalist Partners, and the firm has a pipeline of loans to put that money to work.
“We expect to top out pretty quickly,” said John Boyt, who co-founded Grant Street with Justin Short in 2019. “We are effectively seeing banks pulling back, and the bridge [lenders] have lightened up. We’re seeing a lot of demand, and we are putting money out.”
The program lends on stabilized properties, mainly in the industrial and multifamily sectors. The latest deal will finance 20 to 30 individual loans of $7 million to $50 million apiece.
All three Grant Street transactions were structured by Jodi Schwimmer, global co-head of Reed Smith’s financial industry group, with tax structuring and advisory assistance from Todd Anderson of Anderson Tax & Finance Law.
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