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CEC-X was formed to make good commercial real estate (CRE) loans better.
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CEC-X developed Credit Enhancement Contracts (CECs) as the first Basel III compliant credit protection solution for CRE finance.
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The CEC-X platform enables CRE lenders to utilize CECs to transfer the risk of quality CRE loans to institutional investors that profit from writing Eligible Guarantees in normal markets and workout CRE assets in distressed situations at conservative attachment points, or basis.
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The CEC-X platform acts as a sophisticated, online marketplace engine that sorts, ranks and presents individual CRE loans to targeted CEC Writers, according to proprietary algorithms, screens and profiles.
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CECs employ a similar structure to a European-style put option, but with unique interim default provisions written within a standardized contract.
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CECs are well suited for distressed markets, but effective in all market environments.
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CEC-X was formed to make good commercial real estate (CRE) loans better.
​
-
CEC-X developed Credit Enhancement Contracts (CECs) as the first Basel III compliant credit protection solution for CRE finance.
​
-
The CEC-X platform enables CRE lenders to utilize CECs to transfer the risk of quality CRE loans to institutional investors that profit from writing Eligible Guarantees in normal markets and workout CRE assets in distressed situations at conservative attachment points, or basis.
​
-
The CEC-X platform acts as a sophisticated, online marketplace engine that sorts, ranks and presents individual CRE loans to targeted CEC Writers, according to proprietary algorithms, screens and profiles.
​
-
CECs employ a similar structure to a European-style put option, but with unique interim default provisions written within a standardized contract.
​
-
CECs are well suited for distressed markets, but effective in all market environments.
-
CEC-X was formed to make good commercial real estate (CRE) loans better.
​
-
CEC-X developed Credit Enhancement Contracts (CECs) as the first Basel III compliant credit protection solution for CRE finance.
​
-
The CEC-X platform enables CRE lenders to utilize CECs to transfer the risk of quality CRE loans to institutional investors that profit from writing Eligible Guarantees in normal markets and workout CRE assets in distressed situations at conservative attachment points, or basis.
​
-
The CEC-X platform acts as a sophisticated, online marketplace engine that sorts, ranks and presents individual CRE loans to targeted CEC Writers, according to proprietary algorithms, screens and profiles.
​
-
CECs employ a similar structure to a European-style put option, but with unique interim default provisions written within a standardized contract.
​
-
CECs are well suited for distressed markets, but effective in all market environments.
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INSTITUTIONAL INVESTORS
on the CEC-X platform are referred to as “CEC Investors”.
Investors write CECs by entering into contractual arrangements with lenders and by providing the investment collateral required for tranches of CEC protection.
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Risk-tailored exposure to CRE loans.
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Enhanced portfolio return, diversification and/or credit exposures.
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Cost efficient deployment of capital into multiple sectors of CRE debt.
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Ability to complement and/or grow existing CRE debt portfolios.
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Ability to meet targeted CRE investment and portfolio goals.
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Opportunity to earn superior returns vs. senior loan, CMBS, CLNs or Fixed Income investments of similar credit quality, collateral support, and duration.
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Resolution of CRE loans in distressed situations at attractive attachment points (basis)​.
Investors in CECs can think of CEC-X as a hyper-efficient source of CRE debt origination that can both be tailored by sector, geography, maturity date, bank origination, or other factors that an investor selects and deliver higher risk-adjusted returns.
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CEC Investors select a subset of first-lien, seasoned, stabilized and performing loans in major U.S. metropolitan areas held on the balance sheets of top U.S. banks.
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CEC Investors do not acquire the underlying assets; rather, they gain exposure to the loans via CECs and an accompanying collateral deposit, with the option, but not obligation to acquire loans in default.
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CEC Investors receive fees plus a cash yield on their deposit, generating a total return that is well in excess of the yield available by investing in senior loans, CMBS or fixed income investments of similar credit quality, collateral support, and duration.
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​CEC Investors in each CEC-X investment tranche can earn a significant spread over similar risk exposures, depending on underlying loan yields, credit quality and other factors with maturities that match portfolio targets.
CEC Writers (a) advance first $ exposure collateral for CEC Guarantees that secures the junior tranche of CRE loans and (b) agree to perform the obligations of the borrower should it fail to deliver on its financial obligations to the bank CRE lender.
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CEC Writers monitor CRE mortgages and if market conditions warrant are prepared to resolve distressed CRE collateral if a CEC is exercised by a bank CRE lender.
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Appropriate for institutional investors seeking non-correlated, CRE debt exposure with yields superior to equivalent risk/duration adjusted senior, collateralized debt solutions in the market today.
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Writers can expect to earn more than 300 bps over direct senior loan interest rates net of fees.
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Investors are presented only those loans that fit their customizable credit box and only write CECs on those loans that they approve.
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Approved CRE loans adhere to a “credit box” and are serviced by qualified bank servicing operations.
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Collateralized by bank pledge of first-mortgage rights to individual senior CRE loans with exercised CEC.
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Right to resolve CRE loan exposures at par value of the loan by making ongoing protective payments.
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Loss (exposure) is capped at 30% of each loan.
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Access to New Distribution Channel of High Quality, First-Mortgage Bank CRE Loans as Alternative to Self Origination or Other Secondary Sources.
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Diversify Existing CRE Loan Book Via Self-Selected Exposures to CRE Assets, Sectors and/or Maturities.
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Earn Interest on CEC Collateral for Life of Loans.
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Generate Superior Returns vs. Senior CRE Debt.
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Favorable Regulatory Capital Treatment for Insurers.
Facility enables CEC-X to scale capacity to meet lenders’ demand for CECs by shifting a portfolio of credit supported CEC exposures and compensation associated with resolving distressed loans to investors seeking investment grade credit exposure to high-quality US CRE debt.
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IG CEC Facility resolves distressed CRE collateral if a CEC is exercised, AND a First-Loss CEC Writer chooses not to cure the loan default.
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Appropriate for institutional investors seeking non-correlated, NAIC 1-type yields superior to equivalent senior CRE loans, CMBS tranches, and A/AA fixed income.
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Limited Partners can expect to earn more than 150 bps over the ICE BofA A - AA US Corporate Index Effective Yield net of fees.
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Credit supported by First-Loss CEC Writer Capital Reserves (equal to 30% of each loan).
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Approved CRE loans adhere to a “credit box” and are serviced by bank originators.
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Collateralized by bank pledge of first-mortgage rights to individual senior CRE loans with exercised CEC.
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Maintains the right to resolve CEC exposures at 70% of par value of the loan and with a 25%+ reduction to loan interest rates, related to the CEC Writer's collateral.
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Loss (exposure) is capped at 15% of each loan.
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Access Large Pipeline of IG Private Credit Exposures.
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Diversify Existing CRE Loan Book Via IG Tranches Within Portfolio of CRE Loans.
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Generate Superior Returns vs. Comparable Fixed Income or Private Credit Investments.
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Favorable Regulatory Capital Treatment for Insurers.