UPDATE 1-Puerto Rico's Popular to sell $568 mln in bad loans

March 1 (Reuters) - Puerto Rico-based lender Popular Inc said it would a sell $568 million portfolio of non-performing loans to a joint venture between Caribbean Property Group and funds affiliated with Perella Weinberg Partners.

The portfolio contains non-performing commercial and construction loans and real estate. Based on the unpaid principal balance on loans and the appraised value of the real estate, the portfolio is valued at $1.02 billion.

Popular is selling the portfolio at its current book value and will book an after-tax loss of about $185 million on the sale on the first quarter.

The company expects substantial reductions in credit-related expenses, Chief Executive Richard Carrion said in a statement. "We have significantly improved our credit risk profile and are better positioned to manage our capital more effectively.

Popular will receive about $112 million in cash, a note for about $203 million, and a 24.9 percent interest in the joint venture.

The company will also provide an advance of about $35 million to cover initial costs of some projects.

The bank will also extend a revolving working capital line of about $30 million to fund certain operating expenses of the venture.

Popular has been selling non-performing loans to clean up its balance sheet. It last sold a portfolio of bad loans in 2011.

Shares of the San Juan-based lender closed at $27.92 on the New York Stock Exchange on Thursday.