Bank of America is under contract to sell a portfolio of commercial mortgages worth roughly $880 million to a group of three investors at a discount, according to sources familiar with the situation. They noted that the deal is expected to close within the next few weeks.
A venture between Square Mile Capital Management, Invesco Real Estate and a fund managed by Canyon Capital Realty Advisors is buying Bank of America's portfolio at a discount of 20 percent to 25 percent off the face value, although some details have yet to be finalised. One source told PERE that Bank of America was eager to unload this portfolio, which generated a significant amount of “market buzz.”
Roughly three-quarters of the 32 loans in the portfolio are performing and are expected to perform through maturity. Somewhere between seven and nine of the loans are nonperforming and are expected to either be worked out or become real estate owned. The property types backing the loans in the portfolio include office, industrial, hotel, multifamily and retail, and one loan is backed by a senior housing property. Officials at Square Mile, Canyon Capital and Invesco declined to comment. Bank of America did not return calls by press time.
This deal is part-in-parcel with Square Mile's recent opportunistic acquisition activity. In April, the New York-based real estate investment firm teamed up with The Blackstone Group to acquire a $385 million portfolio of hotel loans from US banking regulator the Federal Deposit Insurance Corporation (FDIC). Last June, Square Mile acquired a 40 percent stake in a portfolio of 57 construction and hospitality loans being sold off by the FDIC.