FDIC Also Stands To Benefit as Investment Consortium Puts $1 Billion of Formerly Distressed Condo Developments on the Block
ST Residential, an investment group led by Barry Sternlicht's Starwood Capital, is planning to cash out a portion of a huge condo portfolio it acquired from the FDIC after the feds took over the $7 billion Chicago-based Corus Bank, which failed in the fall of 2009.
ST Residential, whose other partners include TPG Capital, Perry Capital and WLR LeFrak, is shopping 13 multifamily properties to prospective buyers. All of the properties are former condominium developments across eight different states and located in markets that are currently experiencing strong apartment rent growth, including Atlanta, Chicago, Houston, Las Vegas, Los Angeles, Phoenix, Stamford, CT, and Tampa.
"We are excited to take this unique portfolio of high-quality multifamily properties to market at a time when there is very strong demand for these unique city-center, newly constructed assets," said TPG's Kelvin Davis and a board member of ST Residential.
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The portfolio carries an estimated value of nearly $1 billion. ST Residential will offer each property individually in sub-portfolios, or as a single portfolio sale.
"The Corus Bank transaction has performed extremely well for the FDIC and our private investor group," said Sternlicht, chairman and CEO of Starwood Capital Group and chairman of ST Residential. "The partnership has repaid $1.3 billion of FDIC purchase money notes and has more than $1 billion of cash in hand. More than 32 loans were paid off at par and we have sold 60% of the condo inventory we acquired at ever-escalating prices. We... look forward to finishing our task with continued excellent performance, including the sale of this portfolio."
ST Residential has hired HFF and Eastdil Secured to manage the sale.
The FDIC stands to be among the chief beneficiaries of a successful sale. It holds a 60% equity interest after selling a 40% equity interest in a limited liability company created to hold assets of Corus Bank to the consortium. The $2.77 billion transaction represented one of the largest acquisitions of distressed commercial real estate assets during the Great Recession.
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