First US P2P Real Estate Tranche Loan Launched

By AltFi on Tuesday 4 November 2014

Alternative Lending

The peer-to-peer industry continues to develop in the US with Money360 launching the first P2P real estate tranche loan.

The platform has launched an $8.75 million Commercial Real Estate Loan. It was financed by a diverse group of lenders, which enabled them to offer the borrowers a lower-cost blended rate. The loan was structured with an “A” tranche at a lower interest rate, and a “B” tranche at a higher interest rate.

Money360 pioneered peer-to-peer real estate lending in 2010 but subsequently put the business on hold and re-launched this September. The platform connects accredited investors with attractive investment opportunities in commercial real estate. And the company is on track to close $25 million in peer-to-peer real estate loans by the end of the year.

Evan Gentry, Founder and CEO of Money360, has commented:

"We are proud to be not only the original peer-to-peer real estate lending platform, but also the first to introduce tranche loans to the U.S. peer-to-peer real estate lending market by closing a large loan with a diverse group of investors. What Money360 is pioneering here will give investors more selection in terms of risk, maturity and return, while giving borrowers access to lower-cost rates on a blended basis."

The $8.75 million loan was secured by a 184,000 square foot industrial building in Salt Lake City, Utah and was funded by 1 institutional investor, 2 private investment groups and 5 high net-worth, accredited individuals. The loan to value ratio was 70% of real estate value and 53% of the total pledged collateral (including real estate and equipment/assets).

Dan Vetter, President of Money360 has said:

"Investors are drawn to Money360's P2P/marketplace lending platform for its exclusive and unique investment opportunities, so the tranche loan program is a natural expansion for Money360. Money360 investors now have an even wider spectrum of investment opportunities with the ability to calibrate their risk and return preferences within an individual loan. Money360's tranche loan program also benefits borrowers by offering them a lower-cost blended rate."

This may be the first tranche loan in the US but LendInvest actually launched a tranche loan in the UK in March earlier this year. And another UK platform called Proplend had a similarly structured loan redeemed in April. The benefit of a tranche loan is that it caters to a broader variety of risk appetites. We expect to see more structured loans issued in the US in the near future as it helps to attract a broader investor base to the peer-to-peer space.

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