The FDIC announced yesterday that the assets of failed Corus Bank will be sold to a private equity consortium that includes Starwood Capital Group, TPG Capital, WL Ross and Perry Capital. The firms will pay $554 million for a 40% stake, or around 60 cents on the dollar (FDIC retains a 60% equity stake).
The bank’s deposits were sold separately in an earlier auction (TPG and Starwood began looking at Corus three or four months ago, before a decision was made to do the deposit/asset split).
I spent some time on the phone last night with TPG senior partner Kelvin Davis, whose real estate experience includes the co-founding of Colony Capital. Most interesting was his assessment of the assets that TPG now holds. A lot of them are luxury condo properties, in all stages of development. I referred to them as “ghost towns,” which Davis said was unfair:
“Most of these assets would almost always be at the very high end of the markets they are competing in, including Miami, New York City, LA, Atlanta or Washington DC… We were encouraged when we did property tours, and learned that there was sales velocity… There was interesting anecdotal evidence of building owners liquidating multiple units in the course of a weekend. Some of that could be driven by reduced sales prices – which isn’t our strategy – but it still showed that there is buyer interest.”
As for PE firms’ strategy, Davis says the operative word is “patience” — in part driven by the FDIC loan terms.