Ashland Place is in the market with its inaugural asset backed securitisation (ABS), which comprises four tranches of aviation loans.
The offering comprises $238.2 million A notes, rated AA by KBRA, with an 67.9% loan-to-value (LTV) ratio based on the loan balance and 38.9% based on the collateral balance. The $53.32 million B notes, rated A-, have a loan LTV of 83.1% and collateral LTV of 47.6%. The $21.92 million C notes, rated BBB-, have a LTV of 89.3% and 51.2% respectively, while the BB- rated D tranche, worth $10.87 million in total, has loan LTV of 92.4% and a collateral LTV of 53.0%. All four classes of notes have a final maturity of July 2031.
Affiliates of Ashland Place Finance, which remains as the servicers, and parent company Davidson Kempner Capital Management (DKCM) will retain 100% of the equity of the subject transaction at closing.
Ashland Place was formed in September 2021 to provide sourcing and loan arrangements in the aviation space under the experienced and steady hand of veteran aircraft leasing and banking executive Jennifer Villa, who joined the company following a long career with CIT.
The proceeds will be used to acquire a portfolio of 11 limited recourse loan facilities comprised of 26 loans, which are secured by 19 narrowbody aircraft, three widebodies and four narrowbody host aircraft engines on lease to 12 lessees located in 11 jurisdictions. The three largest lessees by loan balance are Corsair International, TUI Airways and Ethiopian Airlines.
The collateral has a weighted average age of 10.0 years (excluding the engines) and an initial appraised value of approximately $612.2 million based on the average of half-life base values provided by three third-party appraisers as of the second quarter of 2023. The appraisers are Collateral Verifications, Avitas, and mba.
The loan portfolio has an initial aggregate loan balance of approximately $350.8 million, an average asset balance of $13.5 million, and a weighted average remaining loan term of approximately 2.8 years. The portfolio has a weighted average seasoning of 18 months. The initial portfolio balance includes $6 million for incremental extensions, and advances for certain assets that have taken place after the cutoff date.
All loans in the portfolio were originated under the Ashland Place platform and are limited recourse, first lien, senior secured loans. The loans are structured with maturities shorter or equal to the lease maturity of the underlying aircraft. There are also additional protections in place for the A note holders.
Atlas SP Securities, a division of Apollo Global Services, is the sole structuring agent. Pivotal Corporate is the managing agent, with UMB acting as back-up services and trustee.
The first aviation loan ABS was closed by Bellinger and Stone Peak in 2021, which secured the portfolio of aviation loans they acquired from National Australia Bank. APL 2023-1 is an ABS loan structure but is a very different transaction. It is smaller in assize but it also has stellar portfolio of loans – all of the loans are secured and on a limited recourse basis and in the sole ownership of Ashland Place. The quality of the loans speaks to the heightened ratings on the tranches of notes, especially significant is the investment grade rating for the C notes, which is despite the additional protection for the senior noteholders.
The deal is believed to be pricing on Tuesday, December 12 and it will be interesting to see investor reaction to the issuance in a very different interest rate environment than 2021 when SALT closed. Watch this space…