JLL Sells $760M Loan Portfolio for Eurohypo
By Scott Baltic, Contributing Editor
On behalf of the New York branch of Eurohypo AG, Jones Lang LaSalle Capital Markets closed the sale of $760 million in loans to US Bancorp, Wells Fargo Bank and Blackstone Group, JLL announced Tuesday. The 13 floating-rate, performing loans are secured by a portfolio of assets in major U.S. markets and were purchased for a collective price in the mid-90′s, as a percentage of par.
The notes are collateralized by a diverse pool of high-quality assets across a broad spectrum of product types include office, retail, multifamily, industrial and land, according to JLL. The portfolio reportedly has a significant New York concentration that’s balanced by loans collateralized by assets in other major metro areas, including San Francisco, Boston, Miami, Houston and Chicago.
Managing Director Peter S. Nicoletti led the JLL team that handled the transaction, which also included Managing Director Jere Lucey and Senior Vice Presidents Dustin Stolly and Maggie Coleman.
The U.S. market for loan sales has matured significantly over the past several years, Nicoletti said. The low discount to par we were able to achieve on this sale is proof of that.
Nicoletti was unavailable for further comment.
A Reuters report last December described Eurohypo, which is wholly owned by Frankfurt-based Commerzbank, Germany’s second-largest bank, as problematic. In 2009, Commerzbank received an 18.2 million euro bailout from the German government; the majority of that amount reportedly has been repaid.
More recently, the European Commission announced at the end of March that it had changed the conditions imposed on Commerzbank in 2009 to divest Eurohypo into a condition to run down the company. Accordingly, Commerzbank must drastically reduce Eurohypo’s commercial real estate financing in Germany, the United Kingdom, France and Poland only.
In conceding that this and other conditions are acceptable, though challenging, Martin Blessing, chairman of the bank’s Board of Managing Directors, said, The objective is that of continuing a small, lower-risk area of the commercial real estate business in Commerzbank.
The Eurohypo brand will be given up eventually, and the scaled-back commercial real estate business will be part of a newly formed segment of Commerzbank, called Real Estate and Ship Finance, which will receive a new name at some point.
From 2008 to 2011, Eurohypo’s portfolio volume in commercial real estate was lowered by more than 20 percent.