Invesco and Partners Buy $880M Bank of America Loan Portfolio

Bank of America has sold an $880 million portfolio of 29 real estate loans to three buyers: a consortium involving two subsidiaries of Invesco Ltd., Square Mile Capital Management L.L.C. and Canyon-Johnson Urban Funds.

October 3, 2011
By Barbra Murray, Contributing Editor

Bank of America has removed a portfolio of real estate loans with a total balance of approximately $880 million from its books, selling the group of 29 performing and non-performing loans to a consortium involving two subsidiaries of Invesco Ltd., WL Ross & Co. L.L.C. and Invesco Advisers Inc., as well as to Square Mile Capital Management L.L.C. and Canyon-Johnson Urban Funds.

The loans are collateralized by assets in 16 states and span the spectrum of real estate types, including hotel, industrial and multi-family, as well as office and retail.

It took the participation of a bevy of entities to cull the millions that went to Bank of America. Invesco Real Estate’s co-managed Invesco Mortgage Recovery Fund contributed capital, as did Invesco Fixed Income, Invesco Mortgage Capital Inc. and Canyon-Johnson Urban Fund III. Invesco Advisers Inc.-managed mortgage REIT Invesco Mortgage Capital Inc. and a fund managed by Square Mile Capital also provided funds for the purchase.

Banks have not been shy about selling off portfolios of commercial real estate-collateralized loans this year, and investment groups have been equally keen to acquire them, including Starwood Capital Group, which purchased a $157 million real estate loan portfolio from Midwest Regional Bank earlier this year at 40 cents on the dollar.

In July, real estate finance and investment company Colony Financial Inc. took a group of 648 performing and non-performing loans with an unpaid principal balance of approximately $388 million off the hands of a U.S. commercial bank for the discounted price of $197 million. At the end of September, Banco Popular de Puerto Rico — the banking subsidiary of Popular Inc., which ranks 36th by assets among U.S. banks — closed the disposition of a commercial real estate loan portfolio with a value of roughly $148 million and a construction-loan portfolio with an unpaid principal balance of $358 million. Goldman Sachs & Co., Caribbean Property Group L.L.C. and East Rock Capital L.L.C. partnered on the establishment of a limited liability company that is the majority owner of the newly created joint venture that bought the Banco Popular assets.

The frenzy to unload real estate loans extends well beyond U.S. borders. According to debt advisory firm Situs Cos., banks are expected to dispose of approximately $20 billion of loans collateralized by European commercial assets through 2012, as reported in a Bloomberg article last week.