A consortium led by Greenwich-based Starwood Capital has won a bidding contest to buy assets from failed Corus Bank, according to a report by the Financial Times today.
It has used a complex financing package offered by the Federal Deposit Insurance Corporation, which was named receiver to the Chicago-based bank last month, to make the offer.
The assets include loans made to condominium projects, many of which are unfinished developments, and are valued at $2.5 billion, half of their face value.
The financing package offered by Federal Deposit enables Starwood and its partners, including Wilbur Ross, hedge fund manager Perry Capital and private equity firm TPG, to access approximately $1 billion in interest-free financing as well as other forms of subsidized borrowing and a revolving credit facility.The partners will also benefit from a $40 million management fee.
The FT also reported that the partners will be prohibited from extracting profits from the deal until Federal Deposit has been paid back.
Corus was closed by the Office of the Controller of the Currency on 11 September after running into financial difficulties. All its deposit accounts, excluding certain accounts, were transferred to MB Financial Bank, also in Chicago.
According to The Wall Street Journal Corus was the 91st bank to have fallen victim to deteriorating conditions in the construction and development markets.
For Starwood, the deal marks the continuation of a busy period. Last month the firm, which is run by Barry Sternlicht, led a consortium including Fortress, DE Shaw and Five Mile in a bid for a $4.1 billion mortgage from hotel group Extended Stay.Extended Stay filed for bankruptcy protection in June this year after failing to meet repayment requirements for its $7.6 billion debt pile.
Starwood leads debt purchase from Corus
Barry Sternlicht’s firm has led a consortium of investors in the purchase of loans made to condominiums by the Chicago-based bank, taking advantage of an attractive financing package offered by the failed bank’s receivers.