A joint venture between the real estate investment firms ""Colony Capital"":http://www.colonyinc.com, headquartered in Santa Monica, California, and the ""Cogsville Group"":http://cogsvillegroup.com of New York City[IMAGE]
placed the winning bid on a portfolio of $1.85 billion in distressed commercial real estate (CRE) loans from the FDIC, the federal agency announced Wednesday.
The portfolio includes 1,660 commercial mortgages that the FDIC characterized as ""distressed,"" of which approximately 50 percent are already delinquent. All of the loans were seized by the FDIC from 22 banks that failed
[COLUMN_BREAK]over the past two years. Seventy-three percent of the collateral in the portfolio is located in Nevada, California, Colorado, Arizona, and Georgia.
The winning bid amounted to approximately 59 percent of the unpaid principal balance of $1.85 billion, according to a ""statement from the FDIC"":http://www.fdic.gov/news/news/press/2010/pr10154.html. For that price tag, Colony Capital and Cogsville receive a 40 percent equity interest in a limited liability company (LLC) created to hold the assets. The FDIC will retain a 60 percent stake in the LLC and share in the returns on the assets.
The FDIC offered the joint venture zero-interest financing on the deal. As the LLC's managing equity owner, Colony Capital will manage, service, and ultimately dispose of the LLC's assets. Cogsville, a minority-owned firm, contributed $16 million to the investment, for a 7 percent stake in the portfolio.
The sale was conducted on a competitive basis, with the FDIC receiving a total of six bids from four bidders.
Over the past year and a half, the FDIC has held 13 auctions for residential and commercial loans from failed banks, which allowed the federal agency to team up with private investors through a jointly owned LLC and share in future asset appreciation.