A real estate loan portfolio estimated to be between $50-70 million was broken up and sold as separate credits last week. Although the reason it was broken up could not be determined, one dealer speculated it was done because the agent received low bids for the portfolio as a whole.
"My guess is nobody was really focused on it. Nobody is looking to put assets to work in the real estate sector," said a dealer. "Any time you see one guy trying to sell real estate names, the market smells blood in the water and will try and see how low they can bid." The identity of the seller could not be determined. The portfolio contained about six names, including Technical Olympic USA and LNR Property Corp., said a dealer.
While loan auctions have become fairly common, one portfolio manager commented on how unusual it was for a shop to sell a portfolio of real estate names. "I haven't seen anything like that recently," he said. "I think the manager decided they wanted to auction off [all] holdings of its real estate exposure."
Several homebuilders and property developers have seen their debt fall in the past several weeks because of a slowdown in the housing market. Technical Olympic has been one of the worst affected; its debt plummeted in September and early October, mostly because of poor sales at its joint venture, Transeastern Homes (CIN, 10/6).
Separately, a $60 million loan portfolio containing about 20 par names was also auctioned off in the secondary last week. The results of the auction, which were due last Thursday, could not be determined by press time.