FDIC Quietly Moving Assets into Private Ownership

GRAPEVINE, TX-Though much of the information and news coming from the third annual RealShare Distressed Assets conference on Oct. 5 was somewhat glum, the Federal Deposit Insurance Corp. received kudos throughout the day for its structured transaction program. As such the conference, sponsored by Real Estate Forum and GlobeSt.com, offered “Profiting through FDIC Asset Disposition Programs,” during which Real Estate Media Group’s content director John Salustri chatted with FDIC’s Richard Salmon.

Throughout this session Salmon, who is assistant director of structured sales for the FDIC, shed further light on the structured transaction program. He pointed out that the program isn’t too far from the RTC model trotted out during the early 1990s. Both programs, he noted, were methods of getting assets into the marketplace. In such programs, the RTC was a passive partner with a private investor, which became responsible for managing a real estate asset and eventually disposing of it.

Today’s structured transaction program isn’t too different from the RTC days. In this particular program, the FDIC gathers assets from failed institutions (ranging from real-estate owned properties to nonperforming loans), places them into pools, and arranges partnerships with the private sector to manage and eventually dispose of these items.

Though based on the RTC model, Salmon acknowledged a couple of differences. First is that today’s program offers smaller pools of $100 million and less, to private investors. “We did our research, and the feedback we got was that investors wanted smaller transactions,” Salmon explained.

Another difference is what Salmon called the investor match program. “This is the investor’s answer to eHarmony,” Salmon said, somewhat wryly then explained that the online program matches potential investors with other partners, from property management firms, to equity companies, to developers. While the FDIC provides this information, it “isn’t endorsing the partners,” Salmon cautioned.

Still, there has been a great deal of success so far in the structured transaction program. Since its mid-2010 rollout, 29 structured transactions have closed, valued at approximately $25 million. There is more out there, Salmon said – and for more information, people should log onto www.fdic.gov.

“If that’s the one takeaway from this discussion,” he commented, “it’s that all the structured transaction information is on this website.”