October 3, 2009
By ZACHERY KOUWE, New York Times
The Starwood Capital Group, the real estate investment firm run by Barry Sternlicht, is close to a deal with the Federal Deposit Insurance Corporation to purchase the assets of Corus Bank, which failed under a mound of soured condominium and commercial mortgage loans, people briefed on the matter said Friday.
In addition to contributing capital for the purchase, Starwood plans to manage several foreclosed or soon-to-be-owned residential and office buildings seized by Corus after their borrowers defaulted. The deal could be announced as soon as Monday, these people said.
A private equity firm, W. L. Ross & Company, and at least two others are also contributing cash to the deal, these people added.
It is unclear how much the group is paying for the assets, which are said to have a face value of about $5 billion.
A Starwood spokesman declined to comment. As part of the deal, the F.D.I.C. plans to take an equity stake in the venture and provide financing.
Corus was seized by the F.D.I.C. last month and its $6.6 billion in deposits were assumed by MB Financial.
If the deal with Starwood goes through, the company will have beaten some major real estate investors like Thomas J. Barrack of Colony Capital; Jay Sugarman of iStar Financial; the New York developer Stephen M. Ross; and Lubert-Adler, a big property investor in Philadelphia.
In the run-up to the financial crisis, Corus barreled into hot markets like California, Florida and Nevada and kept lending as those markets boiled over.
Rather than diversify, it concentrated its lending bets by financing only a handful of big, risky projects. And it poured its idle cash into a small group of other banks and financial companies that were upended when the crisis struck.