F. Scott Fitzgerald wrote that "The rich are different from youand me," to which Ernest Hemingway sarcastically responded, "Yes,they have more money." When it comes to investing on the largescale we've seen lately from the Blackstone Group, Colony Capitaland other deep-pocketed players, you could say that both Fitzgeraldand Hemingway have a point. And even though most investors can't,don't or won't swim in those deep waters, recent deals by theseplayers provide solid guidance.

Certainly, Los Angeles-based Colony Capital didn't acquire its40% stake in FDIC loan portfolios with a face value of well over $3billion by purchasing one note at a time from the federal agencyover the course of several years. This tally was reached in justabout a year. Yet many of the same principles apply regardless ofthe scale of the deal. "It's a continuum, from a whole loan boughtby a single investor to a joint venture between the investor andthe FDIC at the other extreme," Jon Barry, Atlanta-based nationalmanaging director of Colliers International's asset resolutionsteam, tells Distressed Assets Investor.

There are differences, not the least of which is that the FDICmodel of private-sector partnerships on loan portfolios is probablysuited only to big plays, such as the $817 million worth ofresidential and commercial mortgage loans Colony bought in Januaryfor 24 cents on the dollar. "On an individual basis, if somebody isattempting to buy from a bank a loan in default, the bank is simplylooking to liquidate as best it can," Barry says. "There is a valueto that loan based not only on the real estate but also on thechallenge the owner of the loan will have in moving throughforeclosure." Considerations of the length of time a foreclosuremay take in one state versus another don't really take precedencewhen the investor is acquiring more than 1,500 loans at a time, asColony did this past January, paying $96 million for a 40%stake.

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