Last week, HomeStreet, Inc. — HomeStreet Bank’s parent company — agreed to sell a $990 million multifamily loan portfolio to Bank of America.
The price that HomeStreet will receive is 92% of the loans’ collective principal balance, the bank said. Reuters reported that the price is approximately $906 million.
The bank’s plan for the proceeds is to fund “a new strategic plan which we expect to result in a return to profitability for the Bank and on a consolidated basis early next year,” Mark Mason, HomeStreet chairman of the board, president, and chief executive officer, said in prepared remarks. He noted that the pricing reflected current interest rates and that the loans were “primarily lower yielding loans with longer duration than the overall portfolio.”
Recommended For You
The additional capital will pay down Federal Home Loan Bank advances and brokered deposits that carry “substantially higher interest rates” than the institution’s core deposits, HomeStreet said. The institution will continue servicing the loans for Bank of America.
The deal sounds like a number that has been appearing in markets. Valley National Bank sold almost $1 billion in CRE loans to Brookfield Asset Management at only a 1% discount from par value. Valley also kept servicing responsibilities, so over time, they’ll make back at least some of the discount.
With the now-long talk of distress that would eventually be available, with so many major banks and private equity companies raising funds to invest in both CRE property and debt, one might have expected bigger discounts. As Nathan Stovall, director of financial institutions research at S&P Global Market Intelligence, told GlobeSt.com early in December, “You’ve had a lot of money raised that banks would purge their portfolios. You’re seeing 5% to 10% of haircuts on overall portfolios and not a lot of those.”
One reason the distress isn’t higher is because the banks have been able to hold off better than the would-be distressed investors. They raise large sums for their funds and investors expect action. “They’re not going to give the money back [to investors],” Stovall said. “It needs to find a home and right now it’s not generating income.” So, the distress deals aren’t massive write-downs.
© 2025 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.
