October 2, 2009
The WSJ is reporting that a group led by Starwood Capital is the likely winner of the auction for Corus Bank’s commercial real estate assets. The “face” value of the assets is about $5 Billion according to the article, and the deal is far from done. Starwood recently raised a big chunk of change through a public offering for the purpose of acquiring distressed commercial assets. According to the article, the FDIC is taking a 60% equity stake in the deal. That is a might big chunk. It will be interesting to see what the FDIC got in exchange and what Starwood had to give up.
The government-run auction includes luxury condo projects in the hardest-hit housing markets in California and south Florida. To minimize the losses to taxpayers from the failure of Corus, the FDIC will take a 60% equity stake in the partnership that ends up owning the Corus assets, according to people familiar with the auction. The FDIC also will provide financing to the partnership.
If Starwood is successful, it will be the latest sign that the firm is emerging as a major force in the purchase of ailing commercial real-estate assets. The firm has closed a $2 billion private equity to buy distressed hotel assets and recently took a real-estate investment trust public, raising another $950 million that will be investing in the growing number of ailing commercial real-estate loans and securities.
Starwood Capital will now have a tough road ahead of them. Any developer or owner now facing the prospect of having a value-add player (as opposed to a bank) owning the debt on their project will probably now be looking at every option – including BK – to help them protect their project.
- Starwood Gets Corus; Pays 60 Cents on the Dollar
- Investors Jostling for FDIC Assets
- CRE Dominoes: Capmark Hitting The Fan
- Colony Capital Going After Corus Bankshares
- Hines to Raise $3.5B in IPO