Toll Brothers Inc., the largest U.S. luxury-home builder, and Deutsche Bank AG bought non-performing real estate loans with a face value of about $200 million, the companies said in a statement today.
The portfolio, purchased from an unnamed financial institution, consists of 83 loans that are mainly for the acquisition, development and construction of residential properties in nine states and Washington, D.C., the companies said. The average loan is for about $2.4 million.
“Deutsche Bank’s financial resources and structuring expertise coupled with Toll Brothers’ proven ability to underwrite, workout and create value in real estate across the nation make this an exciting transaction,” Douglas C. Yearley Jr., chief executive officer of Horsham, Pennsylvania-based Toll Brothers, said in the statement.
Toll Brothers and Lennar Corp., the third-biggest U.S. homebuilder by revenue, have moved into managing and trading distressed real estate assets to boost earnings as demand for houses slumps. U.S. new-home sales sank last month to their lowest pace in records dating to 1963, according to the Commerce Department.
The transaction with Deutsche Bank is the second for Toll Brothers’ distressed investing division, Gibraltar Capital Asset & Management LLC. The unit joined Oaktree Capital Management LP and Milestone Asset Resolution Co. last year to purchase a portfolio of loans from the Federal Deposit Insurance Corp. Those loans, with a $1.7 billion face value, were originated by Amtrust Bank, which was seized by regulators in 2009.
The cost of the the purchase with Deutsche Bank wasn’t disclosed. Toll Brothers acquired a majority interest and will be the portfolio manager conducting the day-to-day management and workout of the loans, according to the statement.
Source: Daily Business Review