NEWPORT BEACH, CA-A $108 million distressed real estate loan portfolio for which Bank of America was agent bank has been recovered, with the sales of the distressed properties recovering 81% of the loan balance, receiver Taylor Grant of locally based California Real Estate Receivership reports. The portfolio comprised 978 lots and 128 homes, primarily in Northern California, with some projects in Southern California.

Commented Grant: “While sales prices were considerably less than when these products came to market two or three years ago, they exceeded what the bank group―composed of Bank of America, Bank of the West, City National Bank, National City Bank and First Bank of Tennessee―expected to realize.” He noted that, to sell the final 14 homes of the portfolio, he employed an electronic auction, which resulted in all of the homes being sold in 48 minutes. “The receivership recovered over $6 million, more than $2 million over the minimum bid prices,” he said. “Bidders came from as far away as Massachusetts.”

Grant, a former developer as well as a former bank real estate loan officer, said that he used a variety of approaches that he has learned since completing his first receivership appointment in 1989. In the case of Element, a 41-unit condominium at Marina

del Rey, CA, he used the electronic auction, attracting some 600 potential buyers via online invitation. The auction sold all of the units in two and one-half hours for $20.55 million, netting the lender 25% more than the bank-approved release price.

To sell other parts of the portfolio, Grant used brokers and personal one-on-one meetings with developers.

Grant believes the receivership business will continue to grow in the coming years. He cites the more than a trillion dollars of commercial real estate loans will be maturing between now and 2014, a significant number of which are expected to default. “The sooner the loans are resolved and the properties are put into the hands of well capitalized owners, the sooner the real estate industry can return to normalcy,” he said.