Merchants Capital Completes $630M Securitization of Healthcare CRE Loans

Merchants Capital announced the securitization of approximately $630 million in healthcare commercial real estate (CRE) bridge loans over the past 16 months originated by VIUM Capital, Merchants’ joint venture partner, and underwritten and closed on the balance sheet by Merchants’ parent, Merchants Bank.

The loans are intended to support the properties until they seek permanent financing through U.S. Department of Housing and Urban Development (HUD).

The securitization pool contains 21 loans collateralized by 74 properties across 15 states for facilities including skilled nursing, assisted living, memory care and independent living. The loans had a weighted average loan-to-value of 69% and a weighted average debt yield above 15%.

Structured as a credit risk transfer (CRT), Merchants, in partnership with ATLAS SP Partners as structuring agent and sole bookrunner, collaborated with a large alternative assets manager to purchase the junior securities, which totaled 15% of the transaction. As part of its purchase, the investor retained the first loss risk retention certificates as a third-party purchaser.

“Merchants has developed a strategic program around loan securitizations, completing four CRTs since 2022, which has helped to provide capital relief, reduce credit risk, and allow Merchants to continue as one of the top multifamily and healthcare bridge lenders in the country,” said Evan Gibson, EVP of capital markets at Merchants Capital.