California-based commercial real estate lender Pelorus Capital Group priced a securitization for cannabis-related real estate assets, calling it a first for the industry.
Institutional investors and hedge funds bought $45 million in bonds and Pelorus retained $70 million of the offering, according to a news release.
The one-tranche securitization was priced at 600 basis points over a one-month Secured Overnight Financing Rate, which was 5.07% when the deal closed July 28.
In a commercial real estate securitization, loans are pooled and packaged together as a collateralized loan obligation, then sold to investors on the secondary market.
“Most industry insiders, lenders and investors believed securitization would never happen in the cannabis sector without a change in legislation,” Dan Leimel, CEO of Pelorus Capital Group and manager of the Pelorus Fund, said in a statement.
“We couldn’t be prouder to prove them wrong.”
Pelorus Managing Partner Travis Goad called the move “… an exciting deal that demonstrates the continued acceptance of cannabis linked investments by institutional investors.”
Goad added that the company plans to issue more securitizations this year.
Chicago-based Performance Trust Capital Partners was the bookrunner for the offering; New York-headquartered Cadwalader, Wickersham & Taft represented the issuer.