NEW YORK CITY-JPMorgan Chase said Tuesday that it has purchaseda $3.5-billion portfolio of performing multifamily and commercialreal estate loans from Citibank. Terms of the deal, which focuseson properties in California, Illinois and New York, were notdisclosed.

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About 3,800 loans are included in the portfolio, the twocompanies said in a joint statement. For Chase, the acquisition isa “strategic addition” to its Commercial Term Lending business,which specializes in loans for moderately priced apartmentbuildings in stable markets.

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For Citi, the deal means clearing $3.5 billion worth of non-coreassets off its books. The non-core business, known as CitiHoldings, currently represents less than 25% of Citi’s balancesheet. The banking giant says it will continue to pursue“divestiture opportunities.”

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Last month, Citi announced it would transfer the management andcertain proprietary interests in its fund of funds, mezzaninefunds, feeder funds and co-investment businesses to StepStone GroupLLC and Lexington Partners. In June, it sold its CanadianMasterCard business to the Canadian Imperial Bank of Commerce, amove that was expected to reduce Citi Holdings’ assets by C$2billion.

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Al Brooks, head of the Commercial Term Lending unit, says in astatement that the loan portfolio “adds strong earning assets inmarkets we currently serve and valuable relationships that willprovide new origination opportunities.” He adds that it mirrorsCTL’s focus on “excellent borrowers in stable markets.” About 80%of CTL’s existing $36-billion portfolio is multifamily loans; thebusiness was part of Chase’s late-2008 purchase of the bankruptWashington Mutual.

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The loan-portfolio deal is expected to close immediately andwill be reflected in Chase’s third-quarter financial results.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.