November 8, 2013
Written by Dan Moynihan
Commercial Real Estate Direct Staff Report
Investors bought 93 percent of the $90.6 million of performing and nonperforming loans that First Financial Network Inc. offered last month through its inaugural multi-seller loan offering.
The Oklahoma City loan-sales specialist offered a total of 1,550 loans on behalf of four sellers. They were backed by commercial real estate, business assets and residential properties.
Buoyed by its success, the company has lined up 245 loans and 67 foreclosed properties to sell at its next offering. It will take indicative bids for the assets, which are being offered on behalf of 12 sellers, on Nov. 15, and will take final offers on Dec. 10. It aims to complete sales by Dec. 20.
A total of nearly 71 percent of the assets in the upcoming offering are nonperforming, while the remainder are performing. Collateral types include industrial, retail, multifamily, land, hotels, self-storage and senior housing. They're scattered throughout the country, with concentrations in Texas, Florida, Georgia and Louisiana. A total of $10 million of the loans are said to be high-quality performers.
At its inaugural event, First Financial offered roughly $100 million of loans. Investors turned in indicative bids in September after preliminary reviews of the assets. Based on those offers, sellers allowed investors to conduct thorough due diligence for their final offers, which were turned in on Oct. 22. If indicative offers for specific assets came in well below a seller's expectations, the sellers had the option of pulling assets from the sales block, well before investors would have conducted their thorough, and costly due diligence.
First Financial isn't taking a fee for listing a loan and gets paid only when an investor makes an offer that exceeds the seller's reserve price. So it's not doing the extensive due diligence work that it typically does for its usual loan offerings, whose success rates are typically greater than 93 percent.