Thursday, March 4, 2010

FDIC Preps Another Round of Structured Offerings

Feb 26, 2010 - CRE News

FDIC is preparing another round of structured offerings of distressed bank loans.

The agency, which has already sold $14.8 billion of loans through 10 such offerings, is gearing up another two. That's on top of the three offerings that are winding their way through the market: two pools of mixed-quality residential mortgages with a balance of some $1.5 billion offered through Stifel Nicolaus, and $420.1 million of hotel construction loans through Deutsche Bank.

Up next is a $610.5 million portfolio of residential acquisition, development and construction loans that Mission Capital Advisors is handling. And after that, the agency is expected to offer $1.8 billion of commercial acquisition, development and construction loans and conventional commercial mortgages through Barclays Capital.

Mission Capital appears to be further along than Barclays with its loan offering, in that it has started soliciting prospective investors. Its offering is comprised of 815 loans that were taken from 19 receiverships. The biggest contributor is New Frontier Bank, a Greeley, Colorado, bank that failed last April.

The portfolio has collateral concentrations in Colorado (33.8%), California (11.8%) and Utah (8.5%.) Roughly 20% of the loans are still classified as performing. And all were originated since 2006 and have a weighted average coupon of 7.8%.

FDIC and Mission Capital have not yet ironed out the offering's exact structure. However, a tentative bid deadline of April 6 has been set.

But in three of its four most recent transactions, the agency sold 40% stakes, keeping the remainder and provided 50% financing at a zero coupon.

For all of its pending deals, it will likely offer a similar structure. It may also consider selling only a 20% stake that wouldn't be subject to its generous financing.

Mission Capital's pending offering would be its first. It was one of 14 advisers tapped by the agency last November to handle structured sales on its behalf. It is also one of five firms that are handling what the agency terms "cash" sales, or whole-loan sales.

So far, Barclays Capital has been the most active of the agency's structured-sales advisers, handling the sale of $6.1 billion of assets in two portfolios, one of which contained $4.5 billion of Corus Bank assets. Keefe, Bruyette & Woods has handled the sale of three portfolios totaling $2.4 billion.