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Commercial Mortgages Dominate Secondary Transactions

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Mortgage Daily

                                                 July 13, 2010

Most of the loans among more than $1 billion in recently marketed or closed secondary transactions were commercial mortgages.

DebtX recently reported the marketing of $364 million in performing and non-performing loans for a northeastern regional bank. The portfolio includes $76 million in commercial mortgages and $57 million in construction-and-development loans. It also included a $97 million portfolio of nonperforming commercial mortgages listed on behalf of a bank in the South and $39 million in non-performing commercial real estate loans listed for a financial services company in the South.

“Sellers are moving aggressively to dispose of loans and benefit from stronger balance sheets,” DebtX Chief Executive Officer Kingsley Greenland said in the statement.

Mission Capital Advisors LLC said in May it was marketing a commercial mortgage portfolio with an outstanding balance of $500 million. The offering includes performing and non-performing properties in several states.

A $421 million portfolio of assets was financed by the Federal Deposit Insurance Corp. through the sale of a 40 percent equity interest in a limited liability company created by the agency. Square Mile Capital Management LLC won the bidding process with a bid of 81.03 percent of the unpaid principal balance. The assets were acquired from the May 2009 failure of Silverton Bank in Atlanta.

The portfolio was mostly comprised of 62 complex construction and permanent hospitality loans originated by Silverton Bank subsidiary SFG. A big share of the loans were subsequently sold to a large network of community banks as loan participations, with SFG retaining the lead position in the participation.

A sale was completed in May of $233 million in notes backed by performing and non-performing commercial real estate loans with a related aggregate unpaid balance of approximately $1.0 billion was sold by the FDIC in May. The assets were accumulated through the failure of 22 banks.

A portfolio of non-performing and underperforming loans with a face value of $192 million and a $5.5 million REO portfolio was acquired by VFC Partners 4 LLC. The FirstCity Financial Corp. affiliate, which was formed for this transaction, will hand over servicing to FirstCity Servicing Corp.

The portfolios include multifamily and commercial mortgages secured by properties in New York and Florida. As part of the deal, FirstCity also agreed to purchase an Ohio property with an approximate carrying value of $9.8 million.

A $100 million mortgage on the Washington, D.C., headquarters of the U.S. Coast Guard was sold by Investcorp Real Estate Credit Fund to the Talos Capital Limited for an undisclosed price, a press release last month indicated. New York-based Investcorp acquired the loan 15 months earlier “at a steep discount.”

The loan is due in 2013. Investcorp touted its timing of the sale, highlighting the recent “renewed demand for commercial real estate exposure.”

A $15.6 million B Participation interest in a $70 million defaulted first mortgage secured by a Riverside, Calif., shopping center was purchased by Retail Opportunity Investments Corp., according to a June 30 press release.

Retail Opportunity also acquired a $7.3 million defaulted first mortgage at a 68 percent discount. The security is a Claremont, Calif., shopping center. Foreclosure proceedings have commenced on the property.

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