A consortium of investors led by Starwood Capital has reached a “definitive agreement” to buy $4.5 billion portfolio of construction loans and real estate formerly owned by Chicago-based Corus Bank, in a deal worth about $2.77 billion.
The consortium, which also includes TPG Capital, Perry Capital and WLR LeFrak, is to purchase the portfolio comprising more than 100 loans and assets linked to an array of sectors including condominiums, multi-family housing, offices and land across the US. The combined assets represent almost 23 million square feet of real estate. The loan assets include both performing and non-performing loans.
The deal sees the vendor, the Federal Deposit Insurance Corporation (FDIC), which was made receiver to the bank last month, own a 60 percent equity interest in Corus Construction Ventures, a limited liability company formed to hold the assets. FDIC will also provide attractive financing measures designed to enable the consortium to undertake the deal effectively. These include: a 0 percent coupon for 50 percent of the purchase price of the limited company; and a $1 billion credit facility to “for working capital purposes” and to further fund developments.
A new board will be installed at the limited company with Starwood taking two seats, TPG taking another two, and Perry taking one seat. Starwood will assume asset management responsibilities for the portfolio.
Barry Sternlicht, chairman and chief executive officer at Starwood said: “The portfolio is unique – not only because of the average loan size – but also due to the exceptional quality and geographic diversity of the assets. The financial structure of this transaction affords the buyer to be exceedingly patient to protect, maintain and enhance the assets while maximizing profit potential for the equity participants.”
Kelvin Davis, partner at TPG said: “A number of TPG principals were very active in real estate investing during the last distressed cycle in the early 1990s, and we are excited to be participating in this promising opportunity as part of our broader real estate interests.”
Corus Bank was handed over to FDIC after the bank ran into financial difficulties. Its deposits were sold and the receivers have been offloading its assets since.