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In partnership with the agency, the Manhattan-based firm buys 109 non-performing commercial real estate loans, mostly in Florida and Georgia; pays 18 cents on the dollar.
By Marine Cole
Published: December 9, 2010 - 2:01 pm
Hudson Realty Capital, in partnership with the Federal Deposit Insurance Corp., has purchased 109 non-performing commercial real estate loans auctioned off by the agency last week. This marked Hudson's first-ever winning bid in an FDIC auction.
The Manhattan-based real estate fund manager paid 18 cents on the dollar for the portfolio of loans, which has an unpaid principal balance of more than $102 million. The FDIC financed half of the purchase and will retain a 60% ownership, although Hudson will be the entity working through the loans. This will involve either negotiating through foreclosure proceedings or collecting payments on loans and ultimately selling them, which the firm expects will take nearly five years.
“We will split the profit with them,” said Renee Lewis, a managing director and the head of Hudson's asset management department, of the FDIC. “It was a smart move from the FDIC to make sure it's not left only with the initial purchase price.”
Hudson typically purchases distressed loans directly from banks and also originates its own loans. It has previously bid on portfolios from the FDIC as well as from special servicers, but pricing hasn't been appealing enough until recently.
“That business over the last 18 months has been developing and we're finally seeing attractive pricing,” said Ms. Lewis. “There are more portfolios out now and some bidders have dropped out.”
Since the portfolio that Hudson purchased was made up of loans extended by seven failed banks predominantly in Florida and Georgia, Hudson plans to open an office in Florida to oversee them.
Hudson has closed on more than $3.5 billion in transactions since its inception in 2002 and currently has $2 billion of assets under management.
Approximately a third of Hudson's total portfolio is in the New York metro area. It includes rent-stabilized units in New York City, a $2.8 million first-mortgage secured by an 8.9-acre industrial park in Staten Island and a $33 million note secured by 109 partially completed condo units in Clifton, N.J.