VFC Partners Completes $290 Million Issuance of Notes Secured by Real Estate Loans and Assets

MINNEAPOLIS, July 29, 2014 /PRNewswire/ -- Varde Partners ("Varde") today announced that certain of its subsidiaries completed the issuance of $290 million in notes secured primarily by real estate loans and assets.  The issuance was completed through VFC Partners and will be serviced through FirstCity Financial Corporation ("FirstCity"), which are both owned by funds managed by Varde. 

The securitization - VFC Series 2014-2 - is the second securitization executed by VFC Partners, following the successful issuance of $185.5 million in notes in September 2013. The VFC Series 2014-2 notes are backed by a pool of seasoned performing and non-performing secured and unsecured commercial loans and real estate owned properties ("REO").  The underlying assets were purchased by VFC Partners from banks, special servicers and other financial institutions.  The transaction was executed through a private offering via Rule 144A. 

"We believe the strong interest in this and the previous securitization reflects Varde's reputation and experience in acquiring real estate loans and assets, as well as FirstCity's servicing expertise," said Ali Haroon, Global Co-Head of Illiquid Investments at Varde.  "We continue to identify potential investment opportunities in the U.S. real estate sector and are actively seeking to acquire similar assets."

"Over its 28-year history, FirstCity has built one of the leading servicing and due diligence platforms for real estate loans and other commercial portfolio assets," said Marcia Page, a Founding Partner of Varde and the Chair of the FirstCity Board.  "We are pleased at the successful completion of this issuance and are focused on effectively servicing the assets."

Varde and FirstCity created VFC Partners in 2009 and have invested over $1.1 billion in small balance commercial real estate loans during that timeframe.  In May 2013, certain funds managed by Varde acquired FirstCity. 

FirstCity, through FirstCity Servicing Corporation, will act as servicer for VFC 2014-2.  The Class A notes are rated BBB- by Kroll Bond Rating Agency, Inc. and were priced at par with a coupon of 2.75%.  The Class B notes were priced 99.9% of par with a coupon of 5.50% and are not rated.  

Credit Suisse served as the sole structuring agent, joint bookrunner and co-lead manager, and Wells Fargo Securities served as the joint bookrunner and co-lead manager.

About Varde Partners

Varde Partners is an $8.5 billion global alternative investment firm that employs a credit-oriented, value-based approach to investing across a broad array of geographies, segments and asset types, including corporate credit, residential mortgages, real estate, specialty finance, transportation and infrastructure. Founded in 1993 Varde Partners employs over 170 people with offices in Minneapolis, London and Singapore.

About FirstCity Financial Corporation

FirstCity Financial Corporation ("FCFC") is a diversified financial services company headquartered in Waco, Texas with an office in Dallas, Texas.  FCFC provides services to lenders and borrowers across the commercial real estate and small business industry.  As of June 2014, FCFC had 136 employees; and its servicing portfolio contained approximately 2,000 active assets with an unpaid principal balance of approximately $1 billion.  FCFC's servicing platform has maintained a positive rating with Standard & Poor's Ratings Service since 1996, and is currently rated as a Commercial Finance Special Servicer as  "Above Average with a Stable Outlook." In addition, Fitch assigned the Servicer a Commercial Loan Level Special Servicer Rating of CLLSS3+. 

SOURCE Varde Partners