Banks, private equity firms and investors may be tallying their resources as first-round bids for a $9.5 billion U.S. commercial real estate loan portfolio owned by failed lender Anglo Irish Bank are due tomorrow, Reuters reported.
However, anxiety among investors over the fluctuating capital markets may slightly reduce the offering prices, as the properties’ performances become more difficult to underwrite.
“With nervousness, everybody’s discount rate goes up and nobody knows exactly by how much. It makes it more difficult and likely makes it less valuable,” Richard Green, director of the University of Southern California’s Lusk Center for Real Estate. “If I’m bidding for something where I’m really uncertain about its value, I’m not going to bid as much.”
About 23 bids are expected tomorrow on the portfolio, which includes loans on the Apthorp building in New York and the Mandarin Oriental Hotel in Boston. Those will then be whittled down to a smaller pool by Aug. 23. Leading contenders for the portfolio include the Blackstone Group and TPG Capital, sources said.
When Anglo selected Eastdil Secured to broker the deal in June, the portfolio comprised about $10.5. billion in loans. Since then, many of the performing loans have been paid off or paid down or are being paid down, reducing the total over time, Reuters said. [Reuters]