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Wednesday, December 23, 2009

Big bidding for FDIC CRE loans


Wait--didn't we hear that this wasn't supposed to happen? And who is leading the bidding? None other than Andrew Beal, who you'll read stories about next year, as on the folk who will have made billions betting by buying distressed assets.

And thats because the FDIC's distressed assets, are distressed mostly in the price that they are selling them for!

WSJ:

Investors are jostling for the chance to buy a $1.1 billion package of commercial real-estate loans extended by failed banks, as these once-toxic assets attract growing interest.

More than a dozen investors, including Texas banker Andrew Beal, have submitted bids to the Federal Deposit Insurance Corp. for the portfolio of loans held by Franklin Bank, IndyMac Bank and other failed lenders, according to people familiar with the matter.

But the portfolio represents only a fraction of the real-estate loans held by the FDIC and the volume is mounting as more banks fail.

The FDIC, which declined to comment on pending transactions, is expected to announce the winning bidder within weeks in what will be its second-largest bulk sale of commercial-property assets since the downturn. The largest deal involved the sale in October of about $5 billion in condominium loans and other property made by now-defunct Corus Bank.

Demand for these assets, at a discounted price, has grown intense. Investors have amassed billions of dollars to buy distressed loans and property much as investors like Sam Zell did in the early 1990s.