First Bancorp, San Juan, Puerto Rico, has entered into a definitive agreement to sell a loan portfolio with an unpaid principal balance of $516.7 million and a new book value of $438.5 million that is largely comprised of construction loans, but also contains some commercial real estate and commercial loans.
Construction loans make up 74% of the portfolio, CRE loans represent 19% of it, and the balance is comprised of commercial loans. The loan portfolio is 94% adversely classified and its sale will help First Bancorp reduce nonperforming assets.
Goldman Sachs & Co.’s and Caribbean Property Group’s PRLP Ventures LLC will serve as the majority owner of a new joint venture organized under Puerto Rico’s laws that plans to buy the portfolio. The portfolio has a purchase price of $275.9 million that is based on 53.4% of the UPB of the portfolio as of Dec. 31, 2010.
The purchase is being funded with $90 million from an initial cash capital contribution from PRLP, $138 million from an acquisition loan to be provided by First Bancorp subsidiary FirstBank Puerto Rico and roughly $48 million associated with 35% equity interests in the JV that FirstBank will retain.
First Bank also will extend an $80 million advance facility to the JV to fund unfunded commitments and costs to complete projects under construction and a $20 million working capital line of credit to fund certain of the JV’s expenses.
The JV is slated to engage CPG subsidiary CPG Island Servicing LLC as servicer of the purchased loans. CPGIS will in turn enter into a subservicing agreement with GS affiliate Archon Group LP with respect to the purchased loans.
