With banks working to clean up their balance sheets, the trading of commercial real estate loan portfolios has recently been active. While one commercial mortgage securitization recently fell apart, the originator of the underlying loans was able to close on another.
HFF announced in August that it completed the sale of a $238 million loan portfolio to an institutional investor. The performing assets were owned by a major financial institution and garnered a premium, though HFF didn’t say how much.
Five first mortgages secured by various commercial property types in multiple states were included in the portfolio, HFF said. The average fixed-rate coupon on the loans was 6 percent.
More than $154 million in commercial mortgages were recently securitized by Starwood Property Trust Inc. in an issuance led by Deutsche Bank Securities Inc. Four first mortgages back the commercial mortgage-backed security, and the effective cost of funds worked out to 5.1 percent.
Starwood still has $123 million in loans it plans to either securitize or sell to a third party. The loans were originally expected to be securitized as part of GS Mortgage Securities Trust 2011-GC4, but that deal fell apart after Standard & Poor’s unexpectedly withdrew its rating from the transaction.
A separate joint news release from Goldman, Sachs & Co. and Citigroup Global Markets Inc. indicated that S&P said it couldn’t deliver the ratings on GS Mortgage Securities Trust 2011-GC4 because of an internal review of its application of ratings criteria with regard to debt-service coverage ratio calculations.
Financial institutions looking to shore up capital are stepping up the active management of their commercial real estate portfolios, according to DebtX. Over the past month and a half or so, the Boston-based firm was expected to sell $550 million in performing and non-performing loans. The sellers include the Federal Deposit Insurance Corp. and seven financial institutions.
DebtX’s offerings include a $112 million portfolio of performing and non-performing loans secured by properties in the Midwest and South; a $102 million portfolio of CRE loans backed by Midwest properties; and $75 million in non-performing retail property and land loans in the Southwest.
Earlier this year, Colony Financial Inc. disclosed that it expected to acquire from a commercial bank a portfolio of 631 performing and non-performing first mortgages with an unpaid principal balance of more than $384 million. The discounted price of the acquisition was $197 million. Joining the real estate investment trust in the purchase were investment funds managed by affiliates of its manager.
Hudson Realty Capital LLC announced earlier this month that it funded $8 million in note acquisition financing. The notes are secured by the debt on four industrial buildings in Brooklyn, N.Y.
Two months earlier, New York-based Hudson led a consortium that acquired a $139 million portfolio of 97 acquisition-development-and-construction loans secured by Colorado properties. Hudson’s partners in the purchase included Soundview Real Estate Partners and JCR Capital Investment Corp. Hudson said that the transaction was its second FDIC-structured sale acquisition.
A note secured by the Holiday Inn Express Hotel & Suites Tower Center in East Brunswick, N.J., was recently acquired by The Lightstone Group for nearly $6 million. New York-based Lightstone called the acquisition “a strong opportunity” and noted that the asset was acquired at a discount.
A $461 million portfolio of high-quality, seasoned CRE loans is being marketed by Citibank, Commercial Mortgage Alert reported. Bids for the loans, many which are guaranteed by wealthy borrowers, are expected to come in at a 3 percent to 6 percent discount.
A recent news story from Bloomberg indicated that the winning bidders for a $9.65 billion CRE loan portfolio from failed Anglo Irish Bank Corp. were JPMorgan Chase & Co., Lone Star Funds and Wells Fargo & Co. While Chase and Wells reportedly acquired performing loans that accounted for around half of the portfolio, Lone Star picked up the remaining sub-performing and non-performing mortgages.
A an agreement was reached last month by Bank of America Corp. to sell a portfolio of around $880 million in performing and non-performing commercial mortgages at a discount of between 20 percent and 25 percent, the Wall Street Journal reported. The portfolio was marketed by Jones Lang LaSalle Inc., and buyers in the transaction included a venture of Square Mile Capital Management LLC, Invesco Ltd. and a fund managed by Canyon Capital Realty Advisors LLC.
