[QUOTE=S.DviaPhilly;4622102]
Quote:
Originally Posted by sandiegodweller
(Post 4622034)
Why would any reasonable investor/lender make investments in new developments when exisiting new projects can be bought at a fraction of replacement costs?
Which existing new projects are you talking about that can be bought? Just curious
|
Several of the recent projects in San Diego were financed by local banks that have since been siezed by the FDIC. I doubt that man of those assets have gone thru the dispostion process yet but they will be coming.
Here is an article on the disposition process:
FDIC Has $30Bln of Assets to Sell
Sep 25, 2009 - CRE News
Despite seizing 118 failed banks with $476.4 billion of assets since the start of last year, the FDIC has only about $30 billion of assets to sell.
But some $4.7 billion is in the market for sale via three massive structured offerings that are being shopped by Keefe, Bruyette & Woods, Deutsche Bank and the team of Pentalpha Capital Group and Midland Loan Services, respectively. Another nearly $2 billion of loans are being offered through the agency's whole-loan sales channel. And $5 billion of assets from Corus Bank are being shopped that the agency initially had hoped to sell at the same time it transferred the bank's deposits to MB Financial.
Factor those assets out of the equation and the agency's left with only about $18 billion of assets to liquidate.
That's not much given the massive volume of assets that were on the balance sheets of banks that have failed. It could be explained in large part by its practice of entering into loss-sharing agreements with bank acquirers.
To be sure, the agency will see continued growth in the volume of assets it needs to liquidate - it has identified 416 institutions with $299.8 billion of assets as troubled banks. But because its loss-sharing arrangements generally result in lower costs to the agency's fast-depleting Deposit Insurance Fund, it's a good bet more such deals will be completed going forward.
Under the loss-sharing arrangements, a bank's acquirer is insulated from 80% of the losses against assets subject to the agreement. That insulation level could climb to 95% under certain circumstances.
Even though the FDIC has to take capital reserves for the potential losses, it is able to keep assets on the balance sheet of a bank, which could continue to manage them and ultimately liquidate them when market conditions improve.
The agency has found that it takes anywhere from 90 to 120 days from when it takes over an institution to determine exactly what it owns, what it's worth and how to sell it. During that time, assets could deteriorate. So keeping them in the hands of a bank benefits asset values as well.
The agency tried to structure a loss-sharing arrangement when it sold Corus Bank, a Chicago lender to the residential condominium sector that had $7 billion when it failed earlier this month. But because of the complexity of the institution's assets, the due-diligence process took longer than anticipated. The thinking now is that the agency will sell an interest in the bank's remaining $5 billion of assets, keeping a stake itself.
It also kept about $3 billion of assets from Colonial Bank, a $25 billion asset institution in Montgomery, Ala., that failed in August. BB&T Corp. took over the institution's deposits and $22 billion of its assets, with $15 billion of those subject to a loss-sharing arrangement. The remaining $3 billion of assets are related to Colonial's residential mortgage lending operation, Taylor, Bean & Whitaker Mortgage Corporation.
Until recently, its whole-loan sales advisers, DebtX and First Financial Network, had been selling a variety of assets that were dominated by commercial real estate loans. But recent offerings from those advisers have involved only consumer, agricultural and business loans as well as loan participations. The agency has since added Eastdil Secured, Garnet Capital Advisors and Mission Capital Advisors to its lineup of loan-sales specialists.
The thinking has been that the FDIC would rely more on its structured offerings, where it sells only a stake in a portfolio of assets and provides financing, to dispose of residential and commercial mortgages, along with acquisition, development and construction loans.
But an agency spokesman indicated it would continue to rely on a variety of sales channels to dispose of assets. "You can't pigeonhole any asset," he said. "Every portfolio is different." He indicated that the agency might also consider using its structured offerings to dispose of foreclosed properties.
Prev