Colony snaps up $1bn FDIC loan portfolio

Colony Capital, the Los Angeles-based private equity real estate firm led by Tom Barrack, has purchased approximately $1bn in commercial mortgages from the Federal Deposit Insurance Corporation. The deal marks the first significant offload by the state-run organisation this year.

Los Angeles-based Colony Capital has purchased $1.02 billion of commercial real estate loans from the Federal Deposit Insurance Corporation (FDIC), the firm said in a statement.

Colony, led by Tom Barrack, has acquired 1,200 loans from the state-owned organisation set up to take over or provide financial assistance to US banks, through its investment vehicles, including the mortgage REIT, Colony Financial.

Colony said the loans were purchased for effectively 44 percent of the unpaid principal balance. To finance the deal, Colony paid approximately $90.5 million, using a further $233 million in notes provided by the FDIC. Deutsche Bank advised the FDIC.

The FDIC had taken over or provided financial assistance to 132 banks by December, however it has completed few sales to private equity real estate firms.

Of the more significant offloads last year was the $2.8 billion sale of construction loans and real estate, formerly owned by Chicago-based Corus Corporation, to Starwood Capital and TPG in October.

More investments by private equity and real estate firms in FDIC-controlled assets are expected in 2010. In August, FDIC voted to ease investment leverage ratios it  had initially planned to impose on the industry, after meeting considerable resistance from a number of private equity firms, including The Blackstone Group.