As the number of distressed loans continues to mount, so do the opportunities to buy debt at a discount. Over the past week, the real estate investment banking firm Carlton Group received two major auction assignments totaling $564 million.
The first sealed bid auction will be comprised of $307 million in non-performing loans and REO assets representing approximately 66 properties located throughout the United States. Carlton was retained by a number of commercial mortgage-backed securities (CMBS) trusts to sell the assets.
“The $307 million loan and REO sale is drawing numerous investors who are attracted to these types of assets, many of which are high-quality, already built, cash-flowing, occupied multifamily and retail properties,” said Thomas McCarthy, managing director of the Carlton Group, based in New York. Bids are due Feb. 25, although no final date has been set for the auction.
The assets to be sold range from 50- to 500-unit apartment complexes to retail centers that are occupied and boast cash flows. For example, among the assets is a 500,000 sq. ft. regional mall. Its loan balance at the time of the foreclosure sale represented approximately $53 per sq. ft. of the net rentable area. The assets also included a 365-unit, garden-style multifamily property, now in REO form.
Carlton’s second auction assignment is being executed on behalf of a major financial institution and includes $257 million in first mortgage loans secured by a variety of commercial properties including retail, multifamily and industrial assets. The 478 loans are located in more than 28 states, with concentrations in New York, Florida, Massachusetts, California, New Jersey, Illinois and Connecticut.
No deadline has been set for the second sale, in which potential buyers can view and bid on properties on a first-come, first-served basis through Carlton’s listing exchange, CEX Loan & REO MLS Exchange (www.carltonexchange.com). This Carlton program allows bidders to bid on the property of their choice in a comfortable timeframe and properties are offered individually, rather than in large, bulk packages, which tend to favor institutional investors, according to the company.
“Many investors are familiar with certain properties and can bid right away,” said Carlton managing director Joe Korbar in a statement. “Others require more time and as long as the properties are still available, bidders are encouraged to bid whenever they wish.”
Carlton has marketed and sold more than $12 billion in loan and REO assets.