Finance Mortgage Banking
March 31, 2008
By: Eugene Gilligan, Senior Editor
DebtX, a loan sale advisor for commercial debt, announced last week that it would sell more than $380 million in commercial real estate loans secured by properties in the southeastern United States. The transaction includes more than 200 lending relationships, with loans range in size up to $20 million and are secured primarily by land, commercial, and residential development projects throughout the Southeast, including Atlanta, Orlando, and south Florida. Investors can bid on pools as well as individual loans. The first of four loan portfolios will bid April 15. Kingsley Greenland, DebtX CEO, talks about the loan sale environment today.
CPN: What percentage of these loans are performing and non-performing?
Greenland: The majority, 75 percent, are performing, while 25 percent, are non-performing.
CPN: Why are institutions opting to sell loans?
Greenland: This one institution that is selling loans [in this sale] is selling for two main reasons. They may be over-concentrated in a specific asset class. Or they may be over-concentrated in a specific market. Also, part of it is credit management, they are disposing of non-performing loans.
CPN: Who do you see as the most significant buyers of these loans?
Greenland: The average size of these loans is relatively small. Buyers should be smaller local banks, which may be looking for loans in their market. Another market should be high yield investors, who may not be able to obtain this type of yield in other assets. A third type of buyer is an investor who is comfortable ending up with the loan’s collateral. So, it could be national player who is looking to acquire assets in the Southeast, who likes the growth prospects in the region.
CPN: Do you see institutions selling more loans as the year progresses?
Greenland: We do expect more activity this year, due to credit dislocation. Banks are less focused on aggregating assets, and more focused on active portfolio management. The thinking formerly was ‘Why sell a good loan?’ The focus now is on optimizing portfolio performance.
By: Eugene Gilligan, Senior Editor
DebtX, a loan sale advisor for commercial debt, announced last week that it would sell more than $380 million in commercial real estate loans secured by properties in the southeastern United States. The transaction includes more than 200 lending relationships, with loans range in size up to $20 million and are secured primarily by land, commercial, and residential development projects throughout the Southeast, including Atlanta, Orlando, and south Florida. Investors can bid on pools as well as individual loans. The first of four loan portfolios will bid April 15. Kingsley Greenland, DebtX CEO, talks about the loan sale environment today.CPN: What percentage of these loans are performing and non-performing?
Greenland: The majority, 75 percent, are performing, while 25 percent, are non-performing.
CPN: Why are institutions opting to sell loans?
Greenland: This one institution that is selling loans [in this sale] is selling for two main reasons. They may be over-concentrated in a specific asset class. Or they may be over-concentrated in a specific market. Also, part of it is credit management, they are disposing of non-performing loans.
CPN: Who do you see as the most significant buyers of these loans?
Greenland: The average size of these loans is relatively small. Buyers should be smaller local banks, which may be looking for loans in their market. Another market should be high yield investors, who may not be able to obtain this type of yield in other assets. A third type of buyer is an investor who is comfortable ending up with the loan’s collateral. So, it could be national player who is looking to acquire assets in the Southeast, who likes the growth prospects in the region.
CPN: Do you see institutions selling more loans as the year progresses?
Greenland: We do expect more activity this year, due to credit dislocation. Banks are less focused on aggregating assets, and more focused on active portfolio management. The thinking formerly was ‘Why sell a good loan?’ The focus now is on optimizing portfolio performance.
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