05/04/2012

UBS, Aegon Form CMBS Lending Alliance

UBS and Aegon are teaming up to write commercial mortgages for securitization.

Under the program, Aegon will source loans via its national mortgage-origination team. UBS will fund and securitize the mortgages. The goal is to originate $200 million to $300 million of loans by yearend.

The alliance comes on the heels of a similar arrangement between another Wall Street shop and an insurer — Barclays and ING Investment Management, which announced their lending partnership in March.

UBS’ role in the program is being overseen by managing directors David Nass and John Herman. Aegon is represented by senior vice president Scott Cote, who runs the firm’s mortgage-origination group.

Like much of the commercial MBS team at UBS, Nass and Herman formerly worked at Lehman Brothers, which often sold rake bonds and B-notes to Aegon before the downturn. That relationship helped to pave the way for the new program between UBS and the insurer.

The joint venture will boost UBS’ lending volume at a time when suitable opportunities are relatively scarce. As for Aegon, it now has another “menu item” for clients seeking mortgage financing, beyond portfolio loans. For example, like many insurers, Aegon doesn’t want its portfolio-loan borrowers to also incur mezzanine debt. Now it can route clients wanting higher leverage to the UBS program, because the CMBS market is more amenable to permitting borrowers to use mezzanine debt.

Aegon is expected to fund more than $1 billion of commercial mortgages for its general account and separate accounts this year. The firm is based in Cedar Rapids, Iowa, and also has lending offices in New York, Louisville, Ky., and Irvine, Calif.

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