|Lennar Corp. in Miami, FL, closed on the purchase of two structured loans transactions with the FDIC. The transactions represent the purchase of two portfolios of loans with a combined unpaid balance of $3.05 billion.
Lennar acquired indirectly 40% managing member interests in the limited liability companies created to hold the loans for $243 million (net of working capital and transaction costs), including up to $5 million to be contributed by its subsidiary Rialto Capital Advisors. The FDIC is retaining the remaining 60% equity interest and is providing $627 million of non-recourse financing at 0% interest for seven years. The transactions include 5,500 distressed residential and commercial real estate loans from 22 failed bank receiverships.
Rialto Capital is a real estate investment management company focused on distressed real estate asset investment, management and workouts. Rialto will conduct the day-to-day management and workout of the portfolios.
"Acquiring and working out distressed real estate loans was a large and extremely profitable part of our business during the last major real estate down cycle in the early 1990s," said Stuart Miller, president and CEO of Lennar. "We take great pride in understanding market cycles and identifying the opportune point of entry. As we have noted on our quarterly conference calls, we have been carefully preparing to invest in this space for the last two years. Our strong cash position and proven track record in this area enables us to capitalize on this market cycle and create long-term value for our shareholders. We expect these transactions will be accretive to 2010 earnings."
Information provided by CoStar.
|Posted - 4 days ago