Monday, December 20, 2010

Colony Closes Structured Deal

$341M In Unpaid Loans Sold By FDIC

Collections & Credit Risk | Monday, December 20, 2010
The Cogsville Group LLC, a private equity firm, and Colony Capital LLC purchased from the Federal Deposit Insurance Corporation (FDIC) two portfolios of more than 700 commercial real estate loans. The two portfolios have an aggregate unpaid principal balance of approximately $341 million.

The FDIC had acquired the loans as the receiver of 14 failed financial institutions.

The transactions, which include both performing and non-performing loans, are the second and third purchases by Cogsville and Colony under a public-private partnership.

In the deal announced Monday, a portfolio with loan concentrations in western states, was purchased at 60% of the unpaid principal balance. A portfolio with loan largely based in northern states, was purchased at 27%.

Colony and Cogsville partnered with entities affiliated with WL Ross & Co. LLC and Invesco Ltd. and Mount Kellett Capital to acquire the portfolios. Milestone Advisors, LLC was hired as financial advisor to the FDIC on the sale of these assets.

Donald P. Cogsville, CEO at The Cogsville Group, says in 2010 his company and Colony acquired more than 2,300 commercial real estate loans with balances exceeding $2 billion.

"I believe this [transaction] is a unique opportunity to purchase distressed real estate assets of commercial banks holding more than $250 billion of non-performing loans, and of special servicers holding another $70 billion," he says. "We expect these numbers to grow over the next two years as more of the $1 trillion of commercial real estate loans originated since 2005 come due in a market that has seen prices fall more than 40%."