Reigo Doubles AI-Powered Bridge Loans Securitization to $200M
This is the second securitization Reigo has done since June 2021.
Reigo Investments announced an additional $100 million securitization in residential bridge loans, led as in June 2021 by Cantor Fitzgerald. In addition, the company closed a $13 million Series A funding round for additional R&D as well as US expansion. Leading the round was Caesarea Medical, which invests in fintech, insurance, and private equity sectors.
“The securitization features a 24-month revolving period, after which the transaction will begin to amortize,” Reigo explained in a press release. “The pool of loans is business purpose loans, 100 percent senior positions with 6-24 months term. The finalization of this deal enables Reigo to increase the maximum loan amount provided for single family residential (SFRs), multifamily, mixed-use, and ground-up construction properties. “
“When we started Reigo three-and-a-half years ago, we wanted to take data science and real estate and create value,” Yariv Omer, co-founder and CEO, told GlobeSt.com last year.
Reigo combines machine learning and big data—as similarly done in many industries—and, in this case, analyzes past loan decisions to build predictive systems. Institutional investors in both Israel and the US work with the firm to identify hundreds of parameters and then correlate them with previously granted loans to see the chances of default and whether investor funds would be returned.
“I like to ask the question, when was the last time you changed your Excel model?” Omer told GlobeSt.com last year. “The answer was always never. The usual answer is even if they want to, they don’t know how to test it. Almost every day we test a new model to see if it’s better or not.” The idea is to make “small incremental steps on a monthly basis” and improve the overall approach.
In theory, machine learning can incorporate new information and redirect algorithms to more efficient use, although that depends on the quality of the data and previous decisions.
“If you just take a look from the risk point of view in the portfolio of what happened in the market versus what happened with us, we started with a much lower non-performance rate,” Omer had said. “We already had a much lower non-performing loan rate than the market. We succeeded to maintain the same low non-performing rate during Covid.”