FDIC Closes On Sale Of $233M Of CRE-Backed Notes

deral Deposit Insurance Corp. (FDIC) last week closed a sale of notes backed by commercial real estate loans from 22 financial institutions for which the regulator was appointed receiver during the period from August 2008 to March 2009. The May 18 sale was conducted through a private offering to qualified purchasers. The $233 million of notes are backed by performing and nonperforming commercial real estate loans with a related aggregate unpaid balance of approximately $1 billion. The notes were originally issued in January to the FDIC as receiver for the 22 financial institutions in connection with the creation of a limited liability company (LLC) to hold the aforementioned assets, and are guaranteed by the FDIC in its corporate capacity. The FDIC still retains its 60% equity interest issued by the LLC, and ColFin DB Funding – formed by entities affiliated with Colony Capital – still owns the 40% equity interest sold to it by the FDIC in January. The sale of notes features three classes of notes with maturities of approximately 1.6 years, 2.6 years and 3.6 years from the closing date, the FDIC says. The notes do not accrue interest or make payments prior to maturity, but rather are sold at a discount to their principal balance and allow investors to earn the difference between the sale price and the principal balance paid at maturity. The $222 million in proceeds generated from the sale of the notes will go to the respective receiverships of the 22 financial institutions. This offering marks the fourth sale of structured sale notes by the FDIC since the early 1990s, and the fourth sale of FDIC-guaranteed debt backed by the full faith and credit of the U.S. SOURCE: [link=http://fdic.gov/news/news/press/2010/pr10120.html ]Federal Deposit Insurance Corp.


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