As the new year began, the Federal Deposit Insurance Corp consummated its second largest (only Starwood's 2.77B purchase of the Corus Bank CRE portfolio last year was larger) CRE loan pool sale.
Using Deutsche Bank as an advisor, The transaction included "1,200 loans with an aggregate unpaid principal balance of $1.02 billion, consisting of substantially all senior secured commercial real estate loans. Approximately, 70% of the loans were delinquent and about 75% of the collateral of the portfolio is in Georgia, California, Nevada and Florida. About one-third of the total was reportedly backed by land and not buildings. All of the loans were from 22 banks that have failed during the past 18 months.
The portfolio was effectively acquired at 44% of the unpaid principal balance of the loans, with a purchase price by the Colony Investors of $90.5 million (exclusive of working capital and transaction costs) for its 40% equity interest."
The article goes on to state that "from last January through Nov. 30, the FDIC announced loan sales with a total book value of $1.66 billion. The commercial real estate loans sold went for about 51% of book value combined. Broken down by quality of loan, the bulk of those sales were for performing loans ($1.16 billion), which sold at 57% of book value. The FDIC sold $387.5 million in nonperforming CRE loans last year at 39% of book value. The remainder of those loans sold last year were for mixed portfolios of performing and non-performing loans.
Those totals do not include Starwood Capital Group's winning bid of $2.77 billion for a portfolio of distressed commercial real estate assets valued at $4.5 billion that the FDIC seized from failed Corus Bank NA. Starwood's bid came in at 61.6% of book value."
Here is my question. Do the FDIC benchmarks established by these trades translate into an industry wide "standard" of expectation?
What do you think?