Friday, October 1, 2010

Structured Deal: FDIC Plans to Auction Real Estate Loans Totaling $1.12 Billion

Bloomberg News

Oct. 1 (Bloomberg) -- The Federal Deposit Insurance Corp. plans to seek bids for about $1.12 billion of commercial and residential real estate loans as part of the agency’s sale of assets seized from failed banks.

The scheduled sales are composed of about $773 million in residential acquisition, development and construction loans and $351 million of debt related to commercial properties, according to preliminary announcements dated yesterday and obtained by Bloomberg News. Cushman & Wakefield Inc. and UniCorp Services Inc. are the marketing agents for the sealed-bid auctions.

The FDIC has completed at least 18 structured-asset sales, auctioning stakes in loans with a total face value of $21.2 billion, since May 2008, according to data on its website and purchaser announcements. Bank failures have totaled 127 in the U.S. this year as souring residential and commercial property loans impair the companies’ capital.

Mariner Holdings LLC last month bought part of a $762 million portfolio of property loans from the FDIC. A unit of Mariner, an asset manager based in Leawood, Kansas, paid about $52 million for a 40 percent stake in the portfolio, the company said in a Sept. 2 statement.

The latest loan sales planned by the FDIC are being marketed in separate residential and commercial parts. The collateral in the residential portion is in 41 states, with Florida, Michigan, Utah, Arizona and Indiana home to more than three-quarters of the properties. The portfolio is slated to be divided into northern, southeastern and western pools, according to an announcement.

Two Commercial Pools

The commercial sale is expected to be split into two pools, according to a separate announcement. One portion will have loans backed by properties in the northern and western U.S. and the other will have debt from the Southeast. The collateral for the commercial loans is in 12 states, with Florida, Utah, Nevada, Michigan and Arizona accounting for 88 percent.

Buyers for the debt, a mix of performing and overdue loans, must meet qualification requirements including the payment of a $250,000 due-diligence deposit, according to the announcements. Bids are due Nov. 16. The portfolios will be sold as structured transactions, meaning the FDIC will share ownership and proceeds with the winning bidder.

David Barr, a spokesman for the FDIC in Washington, and Martin Nee, a spokesman for New York-based Cushman, both declined to comment. John Lester of Dallas-based UniCorp didn’t immediately return a telephone message or e-mail.

AmTrust Bank and Irwin Union Bank & Trust Co. are among the failed banks whose loans are in the planned sales. Irwin Union, based in Columbus, Indiana, was closed on Sept. 18, 2009, and AmTrust of Cleveland was taken over by federal regulators on Dec. 4, according to the FDIC’s website.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net .

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net.