BlueVirgo Capital Management is marketing $106 million of bonds backed by tax-lien certificates on property in New Jersey and Florida, according to Kroll Bond Rating Agency.
BlueVirgo 2015-1 will securitize some $83.5 million of property tax liens with balances of less than $70,000; the average tax lien balance is $21,444.
The structure also allows for an additional $20 million of tax liens on New Jersey properties to be added to the collateral pool during the first six months after the transaction's close. These purchases will be funded by an $18 million account that will be partially funded at closing from note proceeds and funded by collections post-closing.
Another account totaling $10 million at closing will be used to purchase subsequent tax liens on properties already subject to tax liens in the initial pool, as well as subsequent liens on properties purchased via the additional tax lien account.
Most of the tax liens in the pool, 78.2%, are on residential properties, but 21.4% of the pool is comprised of tax liens on commercial properties, 0.2% are tax liens on other property types, 0.1% of the pool are tax liens on industrial properties and 0.1% of the pool are tax liens on vacant land.
Kroll assigned AAA ratings to the notes, which mature on Dec. 15, 2022. Credit enhancement on the notes is comprised of over collateralization; cash reserve accounts, amounts in the additional and subsequent tax-lien accounts and excess spread.
Wells Fargo is the sole book runner on the deal.
Tax liens are given a statutory "super-priority" lien position that is superior even to a previously filed mortgage. Most of the tax liens purchased by BlueVirgo redeem during the initial redemption cycle, prior to becoming real estate owned; only 0.03% (by count) of tax liens purchased in New Jersey and Florida are on real estate owned property, according to the presale report.
If the tax liens become REO, BlueVirgo begins "a defined, systematic approach toward efficient foreclosure management so as to minimize the lag time associated with local municipality bureaucracy," the report states. "BlueVirgo utilizes the resources it has at hand to make sure maximum value is extracted from these properties, including engaging local brokers with REO expertise as well as marketing to local developers."
Since its inception in 2013, BlueVirgo has serviced a total of approximately $180.3 million of tax liens primarily in the states of New Jersey and Florida.