Apollo Global Management and Hudson Realty Capital have acquired a $200 million portfolio of nonperforming commercial real estate loans from United Community Bank, the firms announced in a statement.
Sister publication Private Debt Investor is reporting that the transaction, which includes approximately 300 positions backed by office, multifamily and retail properties across several states, represents the third deal on which Hudson Realty and Apollo have partnered. According to the statement, the two firms supplemented the acquisition with debt purchased from a CMBS trust on an Atlanta-area industrial complex.
“This acquisition is closely aligned with one of Apollo's real estate strategies to pursue opportunistic investments involving operationally complex assets in stable and improving markets nationwide,” said Apollo real estate partner Coburn Packard in a statement. Neither Packard nor Hudson Realty responded to a request for further comment.
In June, United Community Bank announced that it had sold classified assets that included performing classified loans, nonperforming loans and foreclosed properties. The sale helped lower United’s nonperforming assets to $31.8 million as of June 30, or 0.44 percent of total assets, according to a second quarter earnings report.
“The classified assets sold this quarter included performing classified loans, nonperforming loans and foreclosed properties, of which a significant portion were in a bulk sale,” said United Community's president and chief executive officer Jimmy Tallent in a statement announcing the June sale. “The sale accelerates the improvement in our credit quality and financial performance and improves our regulatory standing while lowering our classified assets ratio (classified assets to Tier 1 capital plus allowance for loan losses) to below 30 percent.”
Many community banks have begun to unload riskier assets to come into compliance with Basel III regulations formalized by the US Federal Reserve earlier this year. Those regulations increased the risk weighting on commercial real estate loans that are past due, which affects banks’ minimum capital requirements.
It is unclear whether the assets acquired by Apollo and Hudson Realty are the same as those sold by United Community Bank earlier this year. Tallent and the bank’s chief financial officer Rex Schuette could not be reached for comment at press time.