WestImmo securitises residential mortgage loans with WestLB under the PROVIDE programme of KfW
Today, Westdeutsche ImmobilienBank (WestImmo) with WestLB as Lead Arranger and Lead Manager have closed their first transaction under KfW’s PROVIDE programme for the securitisation of risks resulting from residential mortgage loans. PROVIDE Green 2003-1 has a total volume of EUR 1,02 billion. The transfer of the portfolio risk is synthetic, in a first step the portfolio risk will be assumed by KfW, which will then immediately after transfer it to the capital market.
The securitised portfolio consists of a total of 8,712 loans. The quality of the structure and portfolio is confirmed by the high share of AAA/Aaa rated tranches (96.5%). The average Loan-to-value is very low (65%), and second ranking loans account for only 16% of the total portfolio. Only 18% of the loans are secured on investment properties.
PROVIDE Green is the second loan securitisation of WestImmo after Real Value One, which was the first ever synthetic securitisation of a global, diversified commercial mortgage loan portfolio. The equity capital released through PROVIDE Green will be used for the granting of additional residential mortgage loans with the aim of maximising WestImmo’s business opportunities and
its return on equity. WestImmo’s activities include the direct granting of residential mortgage loans, among others via the Internet under the brand ImmoBank as well as via its information centre and professional partners. WestImmo targets low-risk standardised credit business which can be processed cost-effectively using lean processes and a modern multi-client IT system. WestImmo intends to securitise additional assets in the near future and is also considering the possible advantages of true sale structures.
PROVIDE Green is the thirteenth transaction with a structure based on the PROVIDE platform of KfW. KfW’s PROVIDE and PROMISE platforms for the securitisation of residential mortgage loans and SME loans, respectively, permit all financial institutions to securitise lending risks in a highly standardised way. Securitisation releases equity capital which can then be used for the extension of additional loans. KfW thereby makes a key contribution to the development of trading in risks resulting from SME and residential mortgage loans.
PROVIDE Green is the fifth securitisation of residential mortgage loans which has been structured and placed in the capital market by WestLB in the last three years. While European Dream 2000 and 2001 for WestHyp and Power 2001 for WestLB were synthetic structures, Kensington RMS 7 (September 2000) and RMS 9 (April 2002) were true sales transactions. PROVIDE Green, which is WestLB's tenth synthetic structure in the past three years, continues to expand the Bank's position in the synthetic securitisation market. In addition, WestLB lead arranged and managed WestImmo's Real Value One transaction in April 2002.