Waterfall focuses on specialty finance opportunities within asset-backed securities, loans, and commercial mortgage REIT sectors. The firm seeks attractive relative value opportunities across more than 60 sectors of the asset-backed market and other areas in which it believes it has a competitive advantage. Waterfall uses its deep sector expertise and analytics, structuring, and operational capabilities to identify and invest in opportunities across private and public markets.
Waterfall’s investment focus extends across geographies (U.S., Europe, and Asia) and specialized sourcing channels, such as secondary trading and directly negotiated primary transactions with specialty finance companies.
By taking advantage of relative value across geographies, loan vintages, and capital structures, the firm seeks attractive risk-adjusted returns that exhibit relatively lower correlation to the broader financial markets.
Launched in 2005, these strategies seek relative value across the asset-backed securitizations market, including in residential real estate, commercial real estate, consumer loans, CLOs, small business, and a number of esoteric sectors. The firm focuses on generating alpha through deep, credit-driven insights in these sectors, coupled with a robust sourcing pipeline of new issue securitizations, secondary trades, and bespoke private transactions negotiated through a wide range of counterparties.
Waterfall launched the loan strategy in 2007 to seek strong absolute returns through investments in performing and non-performing loans, with an emphasis on real estate secured. The strategy seeks best relative value in either the secondary market (often distressed) or primary markets (direct lending via conduit programs) in loan sectors where credit or regulatory complexity limits competition and provides a higher liquidity premium. Waterfall’s technology-enabled vendor oversight system “WAMCAM” (including ownership of government licenses) allows us to pivot nimbly across more than 20 loan sectors globally today.
In 2013, Waterfall seeded the broad CRE platform, Ready Capital (NYSE: RC), from our distressed small balance commercial loan strategy. RC is Waterfall’s lead permanent capital vehicle and is the 4th largest commercial mortgage REIT (measured by equity), with leading market share in the U.S. lower-middle market CRE transitional lending space. RC is also the largest non-bank/4th largest Small Business Administration 7(a) lender (measured by SBA approvals). The platform is fully integrated into the Waterfall CRE ecosystem, providing proprietary deal flow via lending professionals throughout the U.S., as well as deep relationships with servicers, brokers, lenders, and sponsors. As with the firm’s Loan Strategies, RC may participate with other Waterfall clients in joint acquisitions of banks’ distressed CRE portfolios.