REAL ESTATE FINANCE AND INVESTMENT
– March 7, 2011 –
A partnership between The Cogsville Group and Colony Capital has closed on the acquisition of two real estate portfolios with an unpaid principal balance of $817 million from the Federal Deposit Insurance Corporation. It is the fifth FDIC purchase the partnership has completed, bringing the total to just more than $3 billion. The acquisition was made via Cogsville Capital Partners Fund I. The fund uses debt of 50% or less to target returns around 20%.
The most recent acquisitions are comprised of commercial and residential acquisition, development and construction loans and were acquired for 23.6 cents on the dollar. About 80% of the pool is made up of vacant properties or partially developed land, said Donald Cogsville, CEO of Cogsville. The FDIC took a 50% stake in these portfolios, a change from the normal 60% interest in revenues attained from the resolution of the underlying loans. The FDIC provided one-to-one leverage with no interest through its structured asset sales program, he added.
Cogsville is beginning to focus more on the sale of distressed assets by special servicers and smaller regional banks. Banks that survived the downturn have started to clean up their balance sheets and the liquidation of small-balance loans by those entities will signal the next phase of opportunity, Cogsville said. “We’re on to the healthy banks trying to stay healthy,” he added. Much of the opportunity before was in assets owned by failed institutions.