UPDATE 2-Colony wins FDIC loan sale for $440 million

* Minority-owned Cogsville junior equity partner

* Bid wins 40 pct stake in $1.85 bln portfolio

* Pays 59 cents on dollar; FDIC guarantees $563 mln notes
(Adds details about Cogsville investment, adviser, byline)

By Paritosh Bansal

NEW YORK, July 14 (BestGrowthStock) – Thomas Barrack’s Colony
Capital won an auction for a 40 percent stake in a portfolio of
distressed commercial real estate loans being sold by the
Federal Deposit Insurance Corp, paying $440 million.

Colony bought the stake in the $1.85 billion portfolio from
22 failed banks. Cogsville Group, a New York-based
minority-owned investor, was its junior equity partner in the
auction, the FDIC said on Wednesday.

Los Angeles-based Colony paid about 59 cents on the dollar
for the portfolio, which consists of about 1,660 distressed
commercial real estate loans, half of which are delinquent, the
FDIC said.

About three-quarters of the loans are for properties in
Nevada, California, Colorado, Arizona and Georgia. Colony will
manage, service and ultimately dispose of the assets, the FDIC

The FDIC received six bids from four bidders for either a
40 percent leveraged ownership interest or a 20 percent
unleveraged ownership interest in the entity created to hold
the portfolio.

The FDIC will retain a 60 percent stake in the entity that
holds the portfolio and will share in the returns on the

It is offering 1:1 leverage financing and guaranteeing $563
million in notes to be issued by the asset company.

The Colony-led group is paying $218 million upfront, with
Cogsville putting in $16 million of that amount for a 7 percent
stake, said a source familiar with the matter who declined to
be named because he was not authorized to speak publicly about
the deal,

Barclays Capital advised the FDIC on the transaction.
(Reporting by Paritosh Bansal in New York and Antonita Madonna
Devotta in Bangalore; Editing by Gerald E. McCormick, Lisa Von
Ahn and Steve Orlofsky)

UPDATE 2-Colony wins FDIC loan sale for $440 million