CRE CLOs have emerged as a powerful tool in commercial real estate financing, with $30 billion issued in 2021. They cater to transitional properties, offering a unique approach compared to traditional CMBS. Despite challenges, their flexibility and resilience continue to shape the industry.
In the rapidly evolving world of commercial real estate financing, a new tool has emerged: Commercial Real Estate Collateralized Loan Obligations (CRE CLOs). As of 2021, these debt instruments have seen a significant surge in popularity, with $30 billion issued, a quarter of which went to multifamily investors. But what sets CRE CLOs apart, and how are they reshaping the industry?
Unlike traditional Commercial Mortgage-Backed Securities (CMBS), CRE CLOs are often employed by non-bank lenders as a leverage tool. They typically target transitional properties that require work, while CMBS loans focus on more stable assets. This distinction allows CRE CLOs to cater to a specific niche within the real estate market, providing much-needed financing for properties undergoing transformation.
Volta Finance Ltd (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.