First BanCorp, based in San Juan, Puerto Rico, is selling a loan portfolio with an unpaid principal balance of $516.7 million and a net book value of $438.5 million to a joint venture company owned by PRLP Ventures LLC - an investing company created by Goldman, Sachs & Co. and Caribbean Property Group.
The loan portfolio includes 74% construction loans, 19% commercial real estate loans and 7% commercial loans.
With the loan sale, First BanCorp will reduce its classified assets and non-performing loans by $410.3 million and $254.3 million, respectively. The transaction will decrease the company's Puerto Rico non-performing construction and commercial real estate loans by 72% and 16%, respectively, and its Puerto Rico classified residential constructions loans by 74%.
The purchase price of $275.9 million, or 53.4% of the unpaid principal balance of the portfolio, is being funded with $90 million from an initial cash capital contribution by PRLP Ventures LLC and $138 million from an acquisition loan to be provided by FirstBankPuerto Rico, a banking subsidiary of First BanCorp. An additional $48 million is coming from equity interests in the join venture company retained by FirstBank.
Aurelio Aleman, president and CEO at First BanCorp said, "The completion of this transaction is an important step in [First BanCorp's] previously discussed strategic plan to improve the quality and performance of our loan portfolio. This transaction reduces our non-performing loan portfolio by 17%."
