NEW YORK (Reuters) - Thomas Barrack’s Colony Capital won a bid to buy a 40 percent stake in a $1.85 billion portfolio of distressed commercial real estate loans from the Federal Deposit Insurance Corp for about $440 million.
Colony bought the portfolio of assets from 22 failed banks along with Cogsville Group, a New York-based minority-owned investor, as its junior equity partner, the FDIC said on Wednesday.
Los Angeles-based Colony paid about 59 cents on the dollar for the portfolio, which consists of about 1,660 distressed commercial real estate loans, half of which are delinquent, the FDIC said.
About three-quarters of the loans are for properties in Nevada, California, Colorado, Arizona and Georgia. Colony will manage, service and ultimately dispose of the assets, the FDIC said.
The FDIC received six bids from four bidders on either a 40 percent leveraged ownership interest or a 20 percent unleveraged ownership interest in the entity created to hold the portfolio.
The FDIC will retain a 60 percent stake in the entity that holds the portfolio and share in the returns on the assets. It is offering 1:1 leverage financing and guaranteeing $563 million in notes to be issued by the asset company.
Reporting by Paritosh Bansal in New York and Antonita Madonna Devotta in Bangalore, editing by Gerald E. McCormick and Lisa Von Ahn
Our Standards: The Thomson Reuters Trust Principles.