Citi Shopping $2.1 Billion Loan Portfolio
Citigroup has placed slightly more than 10% of a $2.1 billion portfolio of fixed- and floating-rate mortgages with investors and continues to shop the remaining loans.
The hotel-heavy package contains more than 50 performing and subperforming whole loans, senior participation interests, B-notes and mezzanine loans. The mortgages range in size from $233 million of mezzanine loans on La Costa Resort and Spa in Carlsbad, Calif., to a $2 million B-note on a Residence Inn hotel in White Plains, N.Y.
Citi has evidently been marketing parts of the portfolio since sometime last year. In a recent offering memorandum distributed to potential buyers, the bank indicated that investors had already circled $268 million of the portfolio. Citi declined to comment.
The bank didn't provide price guidance for many of the loans. Where specified, prices ranged from 70% to 92% of face amount. Most of the whole loans were in the vicinity of 85 cents on the dollar, while the mezzanine loans and B-notes typically were around 80 cents.
Hotel loans dominate the portfolio. The floating-rate mezzanine loans on La Costa Resort and Spa, which mature next February but have a 2-year extension option, have coupons ranging from 186 bp to 326 bp over Libor. Price talk was specified for only the senior mezzanine tranche - 85% of face amount.
There was also a $203.6 million fixed-rate participation interest in a $310 million mortgage on a Red Roof Inn hotel portfolio. That loan, which has a 6.7% coupon and matures in 2017, was also being shopped at 85% of face amount. The other portions of the $310 million mortgage were securitized.
Another large hotel loan was a $150 million mezzanine note on a CNL Hotels portfolio. That loan, which matures in May 2012, was pegged at Libor plus 325 bp. No price talk was given.
All told, the portfolio contained $1.4 billion of floaters and $765 million of fixed-rate loans. In addition to hotels, there were also mortgages on several other property types, as well as a $30 million construction loan and a $4.1 million loan on a foreclosed shopping center in Houston.
Among the larger non-hotel loans was a $195 million senior mortgage and $30 million senior B-note on Chrysler's headquarters building in Auburn Hills, Mich.; $135 million of senior and subordinate debt on the U.S. Coast Guard's headquarters building in Washington; a $65 million B-note on the 404,000-square-foot Lincoln Square Building in Washington; and a $42.5 million mezzanine note on the Apthorp, a residential property in Manhattan.
The Citi portfolio is one of the larger loan packages on the market. However, many offerings are essentially on hold as investors wait for the U.S. Treasury Department and Federal Reserve to announce details about their bailout programs, which will provide low-cost financing to buyers of distressed assets, including commercial MBS and commercial mortgages, in an effort to spur sales and clean up bank balance sheets.
Citi has been aggressively reducing its commercial mortgage exposure, largely through loan sales. The bank received about $4.5 billion from loan sales over the past six months, according to one person familiar with its operations. The bank's net exposure to commercial mortgages and CMBS declined 76% last year, to $5.8 billion at yearend from $23.8 billion a year earlier.