Lennar completes transactions with FDIC to work out distressed loans
The Associated Press
Developer Lennar Corp. said Wednesday it has completed transactions with the Federal Deposit Insurance Corp. under which the homebuilder and the independent government agency will resolve about 5,500 distressed real estate loans.
Lennar and the FDIC, which insures bank deposits, will hold equity interests in two portfolios of loans with a combined unpaid balance of $3.05 billion, Miami-based Lennar said. The transactions include about 5,500 distressed residential and commercial real estate loans from 22 failed bank receiverships.
For about $243 million, Lennar indirectly acquired 40 percent managing member interests in limited-liability companies created to hold the loans.
The FDIC is retaining the remaining 60 percent stake, and is providing $627 million in financing at zero percent interest for seven years.
A subsidiary of Lennar, Rialto Capital Advisors, will conduct the day-to-day management and workout of the distressed loan portfolios.
Lennar President and CEO Stuart Miller said acquiring and working out distressed real estate loans was a large and profitable part of his company's business during the real estate slump in the early 1990s.
Miller said Lennar is "pleased to return to this business and honored to partner with the FDIC."
He said Lennar has "been carefully preparing to invest in this space for the last two years."
The transactions with FDIC are expected to add to the company's earnings this year, Miller said.
Lennar announced the transaction after the close of trading Wednesday, when its shares rose a penny to $15.61.
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