HFF Closes Sale of $96M CRE Loan Portfolio

Acting on behalf of a major life insurance company, HFF has wrapped up the disposition of a portfolio of 28 sub- and non-performing commercial loans valued at $96.2 million. A distressed debt fund acquired 25 of the loans, while the remaining three were sold to separate owners.

By Barbra Murray, Contributing Editor

One of the properties in the portfolio.

Acting on behalf of a major life insurance company, HFF has wrapped up the disposition of a portfolio of 28 sub- and non-performing commercial loans valued at $96.2 million. A distressed debt fund acquired 25 of the loans, while the remaining three were sold to separate owners.

Investors were attracted to the portfolio like bees to honey. HFF received in excess of 40 offers, with 10 of the bidders having set their sights on the entire group of assets. “There’s a lot of capital that are looking for good, decent deals and opportunistic deals that they can buy at discounts, so that’s why there was a lot of interest in these loans,” Stuart Salins, a senior managing director with HFF, told Commercial Property Executive. “If the loan is perceived as a loan to own — meaning you buy the note and there’s a high likelihood that you’ll ultimately be able to get to the property — that’s going to appeal to funds, and there’s a billion types of them, and it also appeals to the strategic property owner/operators that would be willing to buy the debt to get to the real estate.”

The loans — the average size of which is $3.5 million — are secured by properties in a range of asset classes, including office, retail, industrial and self-storage, as well as a parking facility and a parcel of land. The properties are sited in secondary and tertiary markets in 14 states.

HFF’s closing of the transaction comes on the heels of two other portfolio sales the commercial real estate and capital markets services orchestrated for the same life insurance company. The firm obtained $89.1 million on the sale 20 higher-risk, performing, sub-performing and non-performing loans secured by an ice-skating rink and office, retail, industrial and self-storage assets.

There are plenty of commercial loan portfolios in the market, but not every portfolio was created equal. As Salins noted, there are bank portfolios, but those frequently involve difficult assets located in challenging markets. And then, of course, there are the FDIC loans. “Those are very tough portfolios and that’s not going to be for everybody,” he said. “So when an insurance company or a bank or special servicer comes to the market with a portfolio like this, it appeals to al lot of different groups and there’s a lot of capital that’s looking for opportunities.”

One of the larger commercial loan portfolio transactions year to date was Starwood Capital Group’s acquisition of a group of 106 performing and non-performing first mortgage loans and real estate owned assets for $312 million.