SAN FRANCISCO -- Wells Fargo & Co. has entered into an agreement with Eastdil Realty Inc., the New York-based real estate investment banking firm, to acquire and securitize underperforming and nonperforming commercial real estate assets.
The focus of the venture will be to actively manage the real estate assets to increase their value, and then to liquidate them, rather than holding them for longterm gains.
New Business Lines Developed
The bank joins several northeastern institutions that have developed an expertise in real estate workouts during a downturn in their main lending market, and then parlayed the expertise into a new business line.
Wells Fargo and Eastdil said they would consider commercial real estate assets of all types.
Under the agreement they will seek out direct investment opportunities and transactions that can be ultimately sold, securitized or structured as real estate investment trusts.
Troubled Assets a Focus
Commercial real estate lending has been a core business for Wells Fargo since the early 1970s.
The bank has commercial real estate offices in five cities outside California: Washington, Chicago, Atlanta, Dallas, and Denver.
"Acquiring and managing troubled commercial real estate assets is an increasing focus for the bank," said Charlie Johnson, vice chairman of the bank. "Because of our long track record as real estate lenders and our experience with the various cycles over the last two decades, we have developed a real expertise in this field.
"Our ability to successfully manage troubled real estate assets was especially proven during the last three years." he added.
Eastdil Realty was founded in 1967 and was a pioneer in the development of real estate investment banking.
The firm has structured more than $6 billion in syndicated and securitized transactions in addition to having raised more than $4 billion in direct debt and equity placements over the last five years.