Friday, June 5, 2009

FDIC Sold $295 Million Commercial Loans In April At 60 Cents On The Dollar

Looks like even the FDIC is flexing its perfectly inelastic supply curve in Commercial Real Estate Loans. After selling a whopping 1,328 performing and non-performing loans in March for $218 million (a 54% discount), the FDIC sold just 315 loans in April for $177 million, a 40% discount. Presumably the investors who have purchased these loans are ineligible for PPIP or else they would know they could have purchased everything at par and paid less than half in equity, resulting in much better IRRs (to themselves, not taxpayers). A novel development for this month, is that in addition to long-time fan of the FDIC loan auction process Beal Bank (LNV), now Colony Capital has also joined in the bidding fray (under Matrix Advisors LLC in the list below). It is notable that all of Colony's loan auctions were won at exactly the same bid: 67.1% of par. Something is definitely quite odd about this result. Reader feedback is welcome.

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