Washington Federal Bank is selling 2,000 multifamily loans with a current unpaid principal balance of $3.2 billion to Bank of America for about $2.9 billion in a bid by the regional lender to scale down its exposure to the commercial real estate sector, according to a regulatory filing by parent company WaFd.

Once the deal is closed, Bank of America plans to enter into a structured transaction or loan sale with one or more funds of Pacific Investment Management, according to the filing.

Regional banks have been under increased scrutiny by regulatory authorities worried about their exposure to troubled commercial real estate loans. In particular, the Federal Reserve has categorized multifamily with office as being the more concerning areas of CRE markets. Another distressing data point for the sector: multifamily showed the biggest transaction decline, at 50%, by the end of 2023, according to MSCI.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.