Monday, October 5, 2009

Starwood, TPG Said to Win Auction for Corus Assets

By Jason Kelly and Jonathan Keehner, Bloomberg

Oct. 5 (Bloomberg) -- A group led by Starwood Capital Group LLC won the bidding for the assets of Corus Bankshares Inc., the Chicago lender seized by regulators after its portfolio of construction loans soured, according to people familiar with the decision.

Private-equity firm TPG was also part of the winning group in an auction run by the Federal Deposit Insurance Corp., said the people, who declined to be identified because the process is private. Corus, which was seized on Sept. 11, had a $5.4 billion commercial real estate loan portfolio as of March 31, including $997 million to condominiums in Miami and southeast Florida, according to company filings.

“For experienced funds with the expertise to manage these assets, it’s a great opportunity,” said Dennis Yeskey, a managing director at AlixPartners LLP who focuses on real estate. “If you needed a loan, for years it was always ‘Corus for condos.’”

FDIC spokesman Andrew Gray declined to comment. Starwood spokesman Tom Johnson and TPG spokesman Owen Blicksilver declined to comment.

The auction attracted bids from developers and private equity firms. At least two-thirds, or $410 billion, of commercial mortgages bundled and sold as bonds coming due between 2009 and 2018 will have difficulty refinancing, according to Deutsche Bank AG data.

WL Ross, Perry

“Commercial real estate exposure is the largest segment of most banks’ balance sheets, and is viewed as uniquely toxic given current market conditions,” said Steven Goldstein, a managing director at Alvarez & Marsal who advises private-equity firms. “These assets are most attractive to groups that focus on real estate, who believe they have the expertise to make lemonade out of lemons.”

The Starwood and TPG group also includes WL Ross & Co. and Perry Capital LLC, the people familiar with the group said.

Colony Capital LLC and The Related Cos, were among groups that submitted bids for the assets, the people said.

MB Financial Bank, which has more than 80 branches in the Chicago area, agreed last month to acquire $7 billion of Corus deposits.

To contact the reporters on this story: Jason Kelly in New York; Jonathan Keehner in New York

Last Updated: October 5, 2009 14:40 EDT