An investment consortium organized by private real estate firm Colony Capital has agreed to purchase two portfolios of commercial real estate mortgages from the Federal Deposit Insurance Corp.
The portfolios include approximately 755 loans with an aggregate unpaid principal balance of approximately $340 million. A newly formed limited liability company was created to hold the acquired loans, with the investor group purchasing 40% of the equity and the FDIC retaining the remaining 60%. The FDIC provided the investors 1:1 leverage financing with a 0% interest rate.
One portfolio consists of 557 CRE mortgages backed by properties located in the northern United States, concentrated in Michigan, with an aggregate unpaid principal balance of approximately $204 million. The portfolio was purchased for 27% of the unpaid principal balance, or roughly $55 million.
Colony Capital and The Cogsville Group teamed with entities affiliated with WL Ross & Co. and Invesco Ltd. in the transaction. (Ross owns specialty servicer American Home Mortgage Servicing.)
The second portfolio consists of 198 CRE mortgages backed by properties located in the western United States, primarily in the Salt Lake City, Utah market. It has an unpaid principal balance of $137 million, purchased at 60% of the unpaid principal balance, or $82.2 million.
In addition to the outside investment partners, Colony Financial, a public real estate investment trust and subsidiary of Colony Capital, participated in the transactions. Colony Financial's equity participation in the two investments was $5 million.
The mortgages were previously held by 14 failed financial intuitions and taken into receivership by the FDIC. According to a statement from The Cogsville Group, the portfolios include both performing and non-performing mortgages.
