WASHINGTON, DC-The Federal Deposit Insurance Corp. just closed a sale of notes backed by commercial real estate loans from 22 financial institutions, for which the FDIC was appointed receiver during the period from August 2008 to March 2009.
The sale was under its structured transaction program, in which the agency sells a stake of a partnership-type structure to an investor who then participates in the upside. In this case, Colony Capital is the partner, having purchased a 40% equity interest in January 2010.
A routine sale--for a new program--this fourth structured sale, nonetheless, illustrates how FDIC is evolving the program on a transaction-by-transaction basis, says Thomas Galli, a shareholder at Greenberg Traurig LLP. "FDIC continues to refine the terms of its transactions." Interest in the program is growing steadily, he tells GlobeSt.com. Currently, there are five structured transactions on the market and another five in the pipeline, which are expected to come to market in Q3.
In this latest deal, the $233 million of notes were backed by performing and nonperforming commercial real estate loans with an aggregate unpaid balance of approximately $1 billion. The sale features three classes of notes with maturities of approximately 1.6 years, 2.6 years and 3.6 years from the closing date. The notes do not accrue interest or make payments prior to maturity, but rather are sold at a discount to their principal balance and allow investors to earn the difference between the sale price and the principal balance paid at maturity.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.
