Banks and private equity firms are eagerly throwing their hats in the ring for the approximately $9.5 billion U.S. real estate portfolio on offer from Anglo Irish Bank, the Wall Street Journal reported. The largest single commercial property loan sale since the start of the recession, complete with a number of troubled loans, the portfolio has attracted much attention from investors in distressed property.
By the deadline yesterday, the Blackstone Group, Lone Star Funds, LNR Property, TPG Capital, Colony Capital, Area Property Partners, Starwood Capital Group, Five Mile Capital Partners and the CIM Group had all submitted or were intending to sumbit bids for at least some portion of the portfolio, sources said. The portfolio has also attracted the interest of banks, including Wells Fargo, JPMorgan Chase and Bank of America, given that there are three portfolios of loans that are performing and expected to mostly stay that way through maturity, the Journal said. [more]

Grubb & Ellis, the commercial real estate brokerage that announced in a regulatory filing earlier this month that it was considering a sale or merger, has just received an $18 million shot in the arm from Colony Capital, the private equity firm owned by billionaire Thomas Barrack. According to Bloomberg News, the financing is part of an agreement under which Colony will explore the possibility of a larger investment during an exclusive, 60-day negotiating period. As it said in the regulatory filing March 21, Grubb & Ellis has hired JMP Securities to help it weigh “strategic alternatives.” At the time, the company was valued at $68 million, but in the days since the announcement, its value has dropped to $52 million. This wouldn’t be the first major real estate investment for Colony in recent months: the firm also recently paid $30 million for a minority stake in Sam Nazarian’s boutique hotel firm. [Bloomberg]

Morgan Stanley has been getting nibbles from multiple U.S. private equity firms looking to take a stake in the bank’s beleaguered real estate funds management business, sources told the Financial Times. Among those who are interested: KKR and TPG, both of which currently have little in the way of property operations, and Colony Capital, which yesterday handed over its stalled, $2 billion Xanadu complex in New Jersey’s the Meadowlands to creditors. Despite the number of suitors lining up for a share, each has proposed only a relatively small investment in the $8.8 billion fund, which is not expected to return much in the way of fees or profits, the paper reported. Morgan Stanley, which may need to cut its stakes in real estate investments anyway in order to comply with the Volcker rule, said it has not made any decisions so far. [Financial Times via CNBC]

With interest rates and prices at striking lows, eager investors have been coming at distressed U.S. commercial real estate properties from all sides. Government-controlled China Investment Corporation, for one, has hired Cohen & Steers, Angelo Gordon and Morgan Stanley to help identify opportunities, the Financial Times reported. Last week, the FDIC auctioned off a portfolio of commercial property loans from failed banks, which went to Colony Capital for $1 billion, or 44 cents on the dollar. The fact that foreign banks, private equity firms and investment funds are taking notice of U.S. commercial real estate opportunities is a positive sign for the troubled sector, often cited as “the next shoe to drop.” Still, some marketwatchers warn, there haven’t been nearly enough deals to rival the amount of commercial real estate debt that needs refinancing, and such “bottom-feeding” activity could be staunched if and when interest rates rise. [Financial Times]

With recent news of increased foreign investment in U.S. real estate, P&I research released the top 10 firms that get the most interest from foreign investors. Topping the list is Colony Capital, with Blackstone in second and AREA Property Partners in third. According to Square Feet Commercial Real Estate blog, a good deal of foreign investment is being put toward residential and multi-family properties, in part because recovery is expected to hit that portion of the market earlier.

An investment group headed by Starwood Capital Group beat out the Related Companies, Lone Star Funds and Colony Capital to win a 40 percent stake in a company created by bank regulators to contain the assets of Corus Bank. The bank was seized last month by the Federal Deposit Insurance Corporation, and has a $4.5 billion loan portfolio that includes many failed South Florida condominium projects. The winning consortium includes TPG Capital (formerly Texas Pacific Group), Perry Capital and WLR LeFrak, a venture that involves investor Wilbur Ross and real estate company the LeFrak Organization. The winning bidder got the assets for a roughly 40 percent discount in a cash and debt deal.

Chicago-based Corus Bankshares, which was badly hurt with failed loans
to Florida condo projects, is looking for a recapitalization or a sale
to repair its battered financial condition. Potential buyers include
Los Angeles billionaire Thomas Barrack’s Colony Capital LLC and Related
Cos., Stephen Ross’s New York development company, according to reports.
Distressed banking assets are of particular interest to vulture
investors. [more]