Lennar Teams with FDIC to Purchase $3.05B of Loans
Posted February 11, 2010 3:40PM PST

Homebuilder Lennar Corp. teamed with the Federal Deposit Insurance Corp. to purchase two portfolios of residential and commercial real estate loans with a total unpaid balance of $3.05 billion.

Lennar said in a filing with the Securities and Exchange Commission that it purchased a 40% interest in the limited liability companies that will hold the loans in a $1.22 billion package that includes equity and debt financing from the FDIC. The Miami-based homebuilder contributed $243 million of equity and secured $365 million in equity from the FDIC, as well as $627 million in non-recourse financing underwritten at about 50% of cost for seven years at 0% interest. The financing package includes an $18 million FDIC guarantee fee that is not included in the purchase price.

The FDIC will retain 60% ownership in the LLCs that will hold the loans.

The two portfolios, known as the KBW and Pentalpha portfolios, consist of about 5,500 distressed residential and commercial real estate loans, from 22 failed-bank receiverships, with an average balance of $555,000. The loans are 90% non-performing. Lennar's subsidiary Rialto Capital Advisors will conduct day-to-day management and workouts of the portfolios.

Source: SEC Filing


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