Is MF1 (Limekiln) Done?

Interested to see what sentiments are on them. They’ve written some crumby loans to some crumby sponsors and I don’t see much room for them to make it out of the next few years.

If the hundreds of millions (billions?) of dollars in Tides Equities notes doesn’t take them down, then will Nitya, Rise48, Laguna Point (I think they’re already done)? I even heard they handed Grant Cardone one. There’s bullish, then there’s foolish…

All the ratings they have kept getting worse and worse over 2020-2023. I’ve been hearing about some of the AAAs being traded at 90/100. Just trying to get a sense of what people are thinking out there. Also they’ve been doing a lot of early bridge on/lease ups on development take outs now so that impact is going to be interesting.

 
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I don't know enough about the space to really understand MF1's exposure in their own issuances (I know it's customary for the issuer to retain a certain % of the pool as shared risk, but that's about it), but you can make an account on DBRS Morningstar and pull all of MF1's presale reports to get an idea of their collaterals going-in & projected metrics. 

& yes, MF1 did do a single-borrower issuance for Cardone Capital on a 585-unit property in FL (MF1 2021-W10X). I've linked the presale report for that issuance below.

https://www.spglobal.com/_assets/documents/ratings/research/12089590.pdf

FWIW, the rating agency assuming untrended rents, 7% vacancy, and a 6.25% exit cap to arrive at a stressed LTV of 140% (lol). Not sure how these ratings agencies and/or issuers are taken seriously & clear the market when advertising these stressed assumptions, but c'est la vie.

 

All the DBRS reports are terrible, they just keep marking the deals in each collateral pool as worse and worse. I wonder what they're broader reputation is, I've seen them become the bottom tier lender who will do a deal for spread regardless of other factors. Some groups out there won't even consider the Sponsorship that MF1 repeatedly lends to...

 

a) Different Berkshire, not the one lead by that guy whose famous quote was "when the Tides roll out..." which would have been hilariously coincidental.

b)  Sure some of their loans were "80% LTV" at origination, they're closer to 120% now... They don't want that crap, will have to also spend a lot on legal fees etc. for foreclosure, which will add to their basis. They'll most likely sell the note at a loss to a group who is more equipped of foreclosing and operating these assets correctly. 

 

MF1 is toast.  I'm really curious how Arbor has been able to hide the distress in their loan portfolio.  It seems like half of the sub 80% occupancy properties that come across my desk are Arbor bridge loans, yet they only reported 7 loans as 'doubtful' in their most recent quarterly report.

 

New short report out by Viceroy:  Arbor Realty Trust – Slumlord Millionaires

It is very detailed and very on point.  Probably worth starting a new thread on this one...  Let's get some bets going on how long ABR has left!

 

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