Exclusive: Interest in Eurohypo loan sale running high
NEW YORK (Reuters) - A $740 million portfolio of performing loans held by failed German bank Eurohypo AG on U.S. properties has attracted more than 100 prospective buyers, several sources said on Tuesday.
Bids for the portfolio, which includes high-profile properties in New York and other major U.S. cities, were due by the end of Tuesday.
Sources familiar with the bidding said more than 100 parties have signed confidentiality agreements and have received marketing material.
Separately, marketing is expected to begin this week on a $1.1 billion portfolio of performing and non-performing loans from Capmark, a U.S. commercial real estate lender that emerged from bankruptcy last year. The loan sales are part of larger trend of lenders offloading assets.
Over the past year, investors have bid on hundreds of billions of dollars in loans from lenders who are trying to shore up their balance sheets and conform with new regulations.
Depending upon their investment criteria, many investors, such as banks, have been buying performing loans. Meanwhile, private equity companies have been searching for non-performing loans whose higher risk can yield double-digit returns.
Many failed European banks have been taken over by their governments, reduced or wound down. Last year Allied Irish Banks Plc (ALBK.I) and Anglo Irish Bank Corp Ltd ANGLLN.UL sold their vast portfolios, including billions of dollars worth of loans on U.S. properties. Wells Fargo & Co (WFC.N) and JPMorgan Chase & Co (JPM.N) were active buyers of performing loans, while distressed debt and equity investor Lone Star Funds snatched up the non-performing debt.
The group of loans from Eurohypo includes a dozen individual properties as well as groups of properties. They include offices, retail space, land, warehouses and apartments. Many are located in New York. Properties in Boston, Miami, Houston, Chicago and San Francisco also are included.
The loans are expected to attract bids from Blackstone Group LP's (BX.N)debt fund and from banks such as JPMorgan and Wells Fargo, according to sources.
Representatives Blackstone and JPMorgan declined to comment. A representative from Wells Fargo could not be reached for immediate comment.
Jones Lang LaSalle Inc (JLL.N) is marketing the loan portfolio.
Eurohypo was one of the most active lenders during the U.S. commercial real estate boom of 2003 to 2007. However, last year it was absorbed by the state-backed lender Commerzbank AG (CBKG.DE), which last week won European Union approval to wind down Eurohypo instead of restructuring it. The upcoming sale is one of several expected as the bank unwinds a U.S. portfolio of about $4 billion, a source familiar with the matter said.
The Eurohypo sale includes senior loans on a portfolio of property owned by General Growth Properties Inc (GGP.N), the second-largest U.S. mall owner. Underscoring the quality of the loans is one held on Mayfair Mall in Wisconsin, a mall considered "class A," generating annual sales of more than $350 per square foot.
Also in the portfolio is a letter of credit for $126.4 million, on New York by Gehry, a 76-story downtown Manhattan apartment building designed by star architect Frank Gehry.
The portfolio also includes a $39.1 million junior loan on the retail portion of 15 Central Park West, one of the most prestigious condominium addresses in Manhattan. The retail tenants include Best Buy, Chase Bank and home goods retailer West Elm.
The portfolio originally included part of a senior loan on the Chrysler Building, but that was removed, according to two people familiar with the sale. It could not be determined why Eurohypo's $125 million part of the $420 million senior loan on the iconic Manhattan office building was removed. The loan carried a coupon of 6.50 percent and matures in 2018, according to marketing material obtained by Reuters.
Interested parties may bid on the entire package, individual loans or part of the portfolio, according to the marketing material.
The Capmark loan sale is expected to be comprised of about 65 loans maturing in about two years and are a mixture of performing and nonperforming. Eastdil Secured, a division of Wells Fargo, is marketing the portfolio.
(Reporting By Ilaina Jonas; Editing by Tim Dobbyn)
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