Wednesday, July 14, 2010

Colony wins FDIC loan sale for $440 million


12:18pm EDT
* Minority-owned Cogsville junior equity partner
* Bid wins 40 pct stake in $1.85 bln portfolio
* Pays 59 cents on dollar; FDIC guarantees $563 mln notes 

NEW YORK, July 14 (Reuters) - Thomas Barrack's Colony Capital won an auction for a 40 percent stake in a portfolio of distressed commercial real estate loans being sold by the Federal Deposit Insurance Corp, paying $440 million.
Colony bought the stake in the $1.85 billion portfolio from 22 failed banks. Cogsville Group, a New York-based minority-owned investor, was its junior equity partner in the auction, the FDIC said on Wednesday.
Los Angeles-based Colony paid about 59 cents on the dollar for the portfolio, which consists of about 1,660 distressed commercial real estate loans, half of which are delinquent, the FDIC said.
About three-quarters of the loans are for properties in Nevada, California, Colorado, Arizona and Georgia. Colony will manage, service and ultimately dispose of the assets, the FDIC said.
The FDIC received six bids from four bidders for either a 40 percent leveraged ownership interest or a 20 percent unleveraged ownership interest in the entity created to hold the portfolio.
The FDIC will retain a 60 percent stake in the entity that holds the portfolio and will share in the returns on the assets.
It is offering 1:1 leverage financing and guaranteeing $563 million in notes to be issued by the asset company.
The Colony-led group is paying $218 million upfront, with Cogsville putting in $16 million of that amount for a 7 percent stake, said a source familiar with the matter who declined to be named because he was not authorized to speak publicly about the deal,
Barclays Capital advised the FDIC on the transaction. (Reporting by Paritosh Bansal in New York and Antonita Madonna Devotta in Bangalore; Editing by Gerald E. McCormick, Lisa Von Ahn and Steve Orlofsky)