The Federal Deposit Insurance Corp. (FDIC) closed on a sale of 40% equity interest in a limited liability company (LLC) created to hold assets with an unpaid principal balance of around $1.85 billion from 22 failed bank receiverships. Barclays Capital advised the FDIC on the transaction.
The winning bidder of the multibank structured transaction is Colony Capital Acquisitions, which is based in Los Angeles, CA, with a price of around 59.00% of the unpaid principal balance.
The Cogsville Group, which is a minority-owned investor based in NYC, was Colony's junior equity partner.
As an equity participant, the FDIC will retain a 60% stake in the LLC and share in the returns on the assets.
The government agency offered 1:1 leverage financing and has agreed to guarantee purchase money notes issued by the LLC in the original principal amount of $563 million. The sale was conducted on a competitive basis, with the FDIC receiving a total of six bids from four bidders on either a 40% leveraged ownership interest or a 20% unleveraged ownership interest in the newly formed LLC.
The FDIC as receiver for the failed banks will convey to the LLC a portfolio of about 1,660 distressed commercial real estate loans, of which about 50% are delinquent.
Collectively, the loans have an unpaid principal balance of $1.85 billion. Seventy-three percent of the collateral in the portfolio is located in Nevada, California, Colorado, Arizona and Georgia.
As the LLC's managing equity owner, Colony will manage, service and ultimately dispose of the LLC's assets.
The bid received from Colony was determined to be the offer that resulted in the greatest return to the participating receiverships. All of the loans were from banks that failed in the past 23 months.
The FDIC, through its minority and women outreach program, conducts asset purchaser, investor and MDI outreach seminars across the country to facilitate participation by firms such as Cogsville in its ongoing asset and structured sales.