NEW GAME IN TOWN?
|As more banks fail—the number is expected to peak this year—the FDIC is scrambling to place their loans and other assets in the hands of healthy institutions and private investors. Many of these loans, of course, are for commercial real estate. Arent Fox’s Mark Katz tells us that while the federal deposit insurance fund may stay in the black during the coming year, the FDIC is trying different approaches to replenish its funds and is using structured loan sale transactions as one way to attract private investors: “FDIC sales of loans and loan pools are not new, but in the context of TARP’s public/private investment program, the increased stresses the banking industry is facing and the increased volume of debt cycling trough FDIC receivership, the structure of the transactions has evolved.”|
|Mark with Arent Fox senior associate Dan Lopez. Not surprisingly, these transactions involve a high proportion of non-performing loans, and the FDIC has been creative in finding ways to share the downside and the upside with qualified participants. Transactions recently offered by FDIC have included a variety of equity, debt and risk-allocation arrangements, including FDIC purchase financing and credit enhancements in some cases. Katz sees these transactions as an opportunity for risk-tolerant investors who can mobilize capital and conduct due diligence quickly. He also notes that while some recent transactions have placed extremely large chunks of distressed debt, FDIC also has a robust pipeline of auctions for smaller loan pools. Interested in knowing more? We’ve got three choices for you. Read more about the subject here. Contact Mark at Arent Fox. Or come hear Mark and the FDIC at our Washington Real Estate Forum, March 16. Sign up now!|