Monday, April 26, 2010

FDIC Nears Launch of $2B of Structured Offerings

Apr 20, 2010 - CRE News

The FDIC is close to formally launching its next two structured offerings, involving a total of $2.2B of commercial real estate and development loans.

The agency, like in its 12 previous structured sales, will sell only an interest, of 20% to 50%, in each of the portfolios. It could also provide financing.

The agency's sales adviser, Barclays Capital, earlier this week started distributing preliminary offering information on the two portfolios, one of which will contain 1,739 commercial real estate loans with a balance of $2B, while the other will have 236 commercial property acquisition, development and construction loans with a balance of $225M.

Just over half of the larger portfolio, by balance, is performing, while the remainder is at least 30-days delinquent. Nearly one-third has matured, but about one-quarter of the portfolio still has another five years left to maturity. The portfolio's weighted average coupon is 7.54%.

Meanwhile, a total of 74.2% of the smaller portfolio is more than 30-days late, with two-thirds having defaulted at maturity.

The loans in both portfolios are backed largely by properties in Nevada, Colorado, California and Arizona. They were held by institutions such as Community Bank of Nevada, New Frontier Bank of Greeley, Colo., and First Bank of Beverly Hills, Calif.

The expectation is that Barclays will accept offers for stakes in the two portfolios in early June, with a targeted closing date of June 25.

Separately, the agency through adviser Deutsche Bank last month took offers for a $420.1M portfolio of hotel construction loans. The buzz is that investor interest in the two pools, which have a total of 63 loans on properties in New York, Georgia, Texas and Florida, was heated and bids were substantially higher than the 31% purchase price the agency's 12 previous structured offerings have commanded.

The FDIC so far has sold loans with a combined balance of $15.3B through its structured offerings. It has sold interests with a book value of $3.9B for a total of $1.2B, or nearly 31% of par. It has also provided a total of $3.1B of financing.

But it has sold $2B of the financing it provided, specifically the $1.4B of debt it lent to a Starwood Capital Group venture that bought a stake in a $4.5B portfolio of assets from the failed Corus Bank. And it sold the $653M it provided to Residential Credit Solutions for its purchase of a stake in a $1.3B portfolio of residential assets from the failed Franklin Bank of Houston.