02/11/2011

RCG Sets Up Conduit to Foster Mezz Loans

In a move to generate mezzanine loans for its high-yield debt fund, RCG Longview has rolled out a securitization program.

RCG is aiming to originate at least $500 million of commercial mortgages this year under the effort. It plans to securitize the senior portions — about two-thirds of each loan — and retain the subordinate interests, which will be structured as mezzanine debt. RCG will park the mezz loans in its $602 million RCG Longview Debt Fund 4.

The New York company decided on the approach after finding it hard to line up suitable high-yield investments. “This was another way for us to get mezz loans,” said president Chris LaBianca. “We wanted to build a mezz portfolio, but this way we have control over the collateral.”

RCG will lend on office, retail, industrial and multi-family properties across the nation. The loan-to-value ratio will typically be 80%.

The fund shop began closing commercial MBS loans in December. Its inventory includes a $23.6 million loan on four multi-family properties in Ohio and a $17.2 million mortgage on the 260-unit Brownstones Apartments in Novi, Mich. It also has a $37 million retail loan in the works.

The buzz is that RCG has struck an agreement with an unidentified issuer to contribute loans to a securitization that could come as soon as the second quarter. The company declined to comment.

The program is an extension of RCG's more-established lending business, which provides mezzanine loans, preferred equity, short-term bridge loans and Fannie Mae mezzanine loans.

RCG was formed in 1998, when it was called Longview Funding. It is backed by a consortium that includes Ramius Capital and Feil Organization, both of New York. Its current investment vehicle, RCG Longview Debt Fund 4, had its final close in 2009.

LaBianca joined the firm in 2008 after a stint as co-head of national originations for Bank of America's CMBS capital markets group. The firm's chief operating officer is Dean Ravosa, who worked with LaBianca at BofA.

Back Print