Oaktree, Colony Win FDIC Auctions

Jul 16 2010 | 5:59am ET

A pair of alternative investment firms has won a pair of auctions for more than $3.5 billion in debt being sold by federal regulators.

Hedge fund Oaktree Capital Management will buy 280 distressed residential loans originated by Ohio’s Am Trust bank, the Financial Times reports. All told, the loans have a face value of $1.7 billion.

It is one of the first times Oaktree has participated in a Federal Deposit Insurance Co. auction. The hedge fund made its winning bid in conjunction with homebuilder Toll Brothers, taking advantage of zero interest rate financing from the FDIC. The regulator also took an equity stake in the loan portfolio.

Meanwhile, private equity firm Colony Capital bested five other bidders for a 40% stake in $1.85 billion in commercial real-estate loans. Colony, which partnered with Cogsville Group, paid only $227 million for the second-largest bulk sale of commercial-property debt by the FDIC. Cogsville contributed $218 million.
As with the Oaktree deal, the FDIC offered zero-interest financing for the 1,660 loans from 22 defunct banks. The FDIC held on to the other 60% of the portfolio.

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