ICP Financial Goes Hunting for Distressed Properties
- Feb 03, 2011
Boulder, Colo.–Investment specialist ICP Financial has inked a $4.8 billion deal with an unnamed but large European bank to buy distressed properties and mortgage portfolios directly from American banks. ICP Financial describes its partner as a “Top 5 European bank”–a vague description, though if measured by assets, the top five European banks (according to thebanker.com) are France’s BNP Paribas, the Royal Bank of Scotland, Credit Agricole Group (France again), and HSBC Holdings and Barclays, both British.
Regarding the bank, ICP simply says, “They are global, have more than 50,000 employees, are well respected, and have nearly 125 years of banking experience.”
ICP Financial and its deep-pocketed banking partner plan to buy U.S. assets for between $5 million to $180 million a pop. The partnership, the company says, will enable it to leverage the financial fire power of its new backer to take distressed assets off the balance sheets of mid-sized American banks in trouble, so they can start increasing revenue.
Boulder, Colo.-based ICP Financial posits that there are still a lot of willing sellers among U.S. banks holding distressed commercial real estate. “In order to survive and thrive once again, [the banks] need to sell their distressed portfolio’s fast to raise cash, lend again, and avoid being seized by the FDIC,” explains CP Financial Managing Director Brad Wozny in a statement. “In certain cases, we may also arrange for these commercial real estate lenders to receive money in advance of a sale of their assets.”
Though ICP Financial hasn’t detailed its plans according to property type, it is probably looking at distressed multifamily assets, which have been trading in considerable volume in the United States lately. According to a recent report by Real Capital Analytics, in fact, distressed apartment sales totaled $7.8 billion in 2010, accounting for 23 percent of all investment sales in apartments, and well above levels of distressed sales experienced by other property types.
Moreover, RCA says, “the elevated level of distressed sales combined with an equal amount of loan modifications/extensions were barely able to keep up with in-flows of newly distressed situations. … The amount of unresolved distress rose [in 2010] by $2.3 billion to its current $37.9 billion.” In other words, there are still considerable opportunities out there for buyers interested in distressed multifamily assets.