$554M Corus Deal Mostly Condos, Multifamily

The portfolio was valued at $4.5 billion and contain more than 100 loans and REO assets in a variety of property types including condominiums, multifamily, office and land; totaling almost 23 million square feet. The group will get a stake in 102 properties including 79 condominium properties, 14 multifamily buildings, eight office facilities and one land development project. The portfolio spans the US including major markets like Los Angeles, Miami, Washington, DC, New York, Chicago and Atlanta.

In addition to Starwood, the group includes TPG Capital, Perry Capital and WLR Le Frak. The companies will be providing equal equity capital for the $554-million purchase, although Starwood will run the day-to-day operations. According to a joint statement issued Wednesday, the newly-formed company will have a five-member board, consisting of two Starwood members, two TPG members and one Perry member.

"We are excited to partner with the FDIC in acquiring the assets of Corus Bank. The portfolio is unique--not only because of the average loan size--but also due to the exceptional quality and geographic diversity of the assets," says Barry Sternlicht, chairman and CEO of Starwood Capital. "The financial structure of this transaction affords the buyer to be exceedingly patient to protect, maintain and enhance the assets while maximizing profit potential for the equity participants."

Kelvin Davis, a partner at TPG, says, "This is a unique opportunity to purchase a sizable portfolio of high-quality assets with strong recovery potential in key US markets. A number of TPG principals were very active in real estate investing during the last distressed cycle in the early 1990s, and we are excited to be participating in this promising opportunity as part of our broader real estate interests."

The FDIC said in a statement late Tuesday that the Starwood-led group was chosen out of a field of eight candidates due to the fact that is was "determined to be the offer that would result in the greatest return for the receivership of all competing bids."

The deal is expected to close by the middle of October. According to reports, Barclays Capital acted as advisor to the FDIC on this transaction.

Corus Bank was seized by the FDIC on Sept. 11th, 2009, at the time holding $7 billion in assets and $7 billion in deposits. MB Financial Bank agreed to purchase the majority of the deposits as well as roughly $3 billion of assets in late September. Prior to this deal, MB owned $8 billion in assets. Corus Bank was the largest bank failure of the year with 11 branches throughout Illinois.