Sotheby's claims a first with $700M securitization backed by art-secured loans

The financing business of global art and luxury firm Sotheby’s has announced a first-of-its-kind securitization backed by art-secured loans.

Sotheby’s Financial Services helps owners of fine art, cars, collectibles, and other luxury collections to unlock liquidity in their assets though financing. The first issuance of its new securitization program is backed by $700 million of asset-backed notes, thought to include works by Rembrandt and Andy Warhol.

"This highly successful transaction, which saw strong demand from institutional investors resulting in a significant upsize to the transaction, will help further our mission of unlocking the power of our clients' collections through the delivery of innovative financial solutions,” said Ron Elimelekh, co-head, COO, and chief capital officer of Sotheby's Financial. “Now with over $2 billion of funding capacity, Sotheby's Financial has a flexible and committed funding framework supported by an existing credit facility and this groundbreaking securitization program."

The firm has originated more than $10 billion in loans since its inception and ended 2023 with portfolio growth of more than 100% over two years, and its highest ever portfolio balance.

"Our clients rely on Sotheby's Financial to provide dependable lending solutions, and today's news only furthers our commitment to enhancing our offerings to clients,” said Scott Milleisen, co-head, and global head of lending. “Thanks to our continued access to capital markets, we are the only lender in the marketplace who can consistently offer loans of up to $250 million underwritten based on the value of one's collection."

The securitization transaction is scheduled to close on April 23, 2024, subject to customary closing conditions.

A recent report from UBS showed a decline in art sales in 2023, although the market still managed $65 million in sales.