A group of investors led by Starwood Capital has reached a “definitive agreement” to buy $4.5 billion portfolio of construction loans and real estate formerly owned by Chicago-based Corus Bank, in a deal worth about $2.77 billion.
The consortium, which also includes TPG Capital, Perry Capital and WLR LeFrak, is to purchase the portfolio comprising more than 100 loans and assets linked to an array of sectors including condominiums, multi-family housing, offices and land across the US. The combined assets represent almost 23 million square feet of real estate. The loan assets include both performing and non-performing loans.
“A number of TPG principals were very active in real estate investing during the last distressed cycle in the early 1990s, and we are excited to be participating in this promising opportunity as part of our broader real estate interests,” Kelvin Davis, partner at TPG, said in a statement.
We are excited to be participating in this promising opportunity as part of our broader real estate interests.
Post-transaction, the FDIC will own a 60 percent equity interest in Corus Construction Ventures, a limited liability company formed to hold the assets being purchased by the Starwood-led group.
The FDIC will also provide attractive financing measures designed to enable the consortium to undertake the deal effectively. These include: a 0 percent coupon for 50 percent of the purchase price of the limited company; and a $1 billion credit facility to “for working capital purposes” and to further fund developments.
A new board will be installed at the limited company with Starwood taking two seats, TPG taking another two, and Perry taking one seat. Starwood will assume asset management responsibilities for the portfolio.
“The financial structure of this transaction affords the buyer to be exceedingly patient to protect, maintain and enhance the assets while maximizing profit potential for the equity participants,” Barry Sternlicht, chairman and chief executive officer at Starwood, said in a statement.