Groundfloor Introduces $77M First-Ever Deferred Pay RTL Bond

Groundfloor Finance, Inc., an Atlanta-based real estate crowdfunding platform, is introducing the issuance of the first-ever deferred pay residential transition loan (RTL) bond. As the first to securitize this product and the primary servicer, the bond is designed for institutional investors seeking differentiated credit opportunities.

Co-founder Nick Bhargava shared details of the bond with Connect Money, stating that it was an initial offering of $77 million, 75% A seniors with 25% risk retention. The bond is a static pool with a bullet repayment structure that will pay down as the underlying loans mature. The bond was widely distributed among credit unions and depositories.

“Groundfloor, as issuer, can provide more credit support because it also operates a proprietary retail facing investment platform that can absorb risk retention and demands the yields it generates,” said Bhargava.

“As the originator, servicer, and issuer, the company is able to extract a 300-400 basis points yield premium over traditional RTL credit that carry comparative underlying project risk,” he added.

To date, Groundfloor has managed more than $1.7 billion in investment volume.

The bond is secured by a diversified portfolio of RTLs originated and asset managed by Groundfloor. Performance Trust Capital Partners, LLC was the sole structuring agent and bookrunner on the transaction.