Showing posts with label Commercial real estate. Show all posts
Showing posts with label Commercial real estate. Show all posts

Wednesday, July 14, 2010

Minority firm part of $1.85 billion FDIC asset sale

An article by Ling-Ling Wei in today's Wall Street Journal noted that: "A partnership between Tom Barrack's Colony Capital LLC and a minority-owned investment firm won the bidding for a $1.85 billion portfolio of distressed commercial real-estate loans auctioned off by the Federal Deposit Insurance Corp.

The deal, the second-largest bulk sale of commercial-property debt under a public-private partnership, is expected to be announced Wednesday by the FDIC.

This deal is the first public-private setup in which a minority-owned firm has taken a stake, albeit a small one, during this economic downturn. Cogsville, an African-American-owned firm, contributed $16 million to the $218 million investment, for a 7% stake in the portfolio.

Over the past year, there have been complaints on Capitol Hill and among smaller financial firms, especially those owned by minorities and women, about the lack of minority-firm participation in various public-private investment programs.

'A lot of minority-owned firms have been angry because they haven't been included in a lot of deals,' said William Michael Cunningham, an investment adviser who tracks minority-owned financial firms.

In response, the FDIC started its minority-and-women outreach program this year, conducting seminars to facilitate participation by firms in its asset sales, FDIC officials said. The move also comes as politicians are ratcheting up pressure on regulators and financial firms to boost minority firms' chances of participating in various asset-management and bank-rescue programs sponsored by the government. These programs are expected to generate millions of dollars in management fees and investment opportunities for private companies."

Socially responsible?

"The Colony-Cogsville group intends to work with borrowers when possible as opposed to foreclosing on them. If a borrower defaults, the group may modify the terms to make the loan current. It would make money as long as the borrower stays current on modified terms. In some cases, the group may sell the debt back to the borrowers for more than what it paid."