WASHINGTON — The Federal Deposit Insurance Corp. announced yet another deal Thursday to share failed-bank assets with nonbank investors, but this time with a new wrinkle.
As part of an FDIC effort to attract smaller bidders, two investment teams paid a total of about $40 million for pieces of the commercial real estate portfolio of the former FirsTier Bank in Colorado. The winning buyers and the FDIC will share ownership of about $300 million in assets.
The sale was the debut of the agency's Small Investor Program. Past transactions have involved asset amounts similar to that in the FirsTier deal, but since the FDIC started using shared-equity deals to unload failed-bank assets investors have typically taken larger pieces.
With the latest deal, the agency said it was testing a new model for targeting smaller investors.
"This pilot program was geared towards the small investor and offered smaller sized asset pools and unique structural features to make it more accessible for smaller investors and increase participation in structured sales while maintaining a level playing field for all investors," the agency said in a press release.
The FDIC created two limited-liability companies to hold the assets, with the agency owning 75% of each and private investors owning the rest. While bids could have included the FDIC providing financing to the two ventures, in exchange for the investors owning a larger share, the winning teams opted for an unleveraged structure.
In one of the two ventures, the private piece went to a consortium including Calista Corp., FACP Mortgage Investment LLC and entities owned by Oaktree Capital Group Holdings, a Los Angeles-based private-equity asset manager. The group paid $25.6 million to share a pool of both commercial real estate loans, and commercial acquisition, development and construction loans. The unpaid balance of the 116 loans is about $158 million. The consortium's 25% stake in the joint venture with the FDIC is expected to increase over time to 50%.
Meanwhile, a 25% stake in a separate pool of residential acquisition, development and construction loans went to Hudson Realty Capital LLC, a minority- and women-owned real estate fund manager in New York. Hudson paid about $15 million for its share, which is also expected to increase to 50%. The 97 loans have a loan balance of about $139 million.