Mohammad;
Its very likely trhat these loans are in geographic areas where values have plummeted and the values represented on the spreadsheet were the appraised values at the time the loans were originated.
That clearly is not the “value” today.
The weighted average Note interest rate, and maturities on a package like this will also come into play. For instance- if the average commerical interet rate is 7% for the package, then in todays marketplace that is considered WAY low, given the tight credit market we now find ourselves in currently. Additionally, if these are long term fixed rate loans, (long maturities Vs shorter term maturity dates) again that type of loan product is not looked upon favorably in what many consider to be inflationary times and an invariable RISE that will take place with interest rates soon. These factors among others will contribute to the discounted pricing.
Hypothecate note portfolio for purchase - Posted by Mohammad
Posted by Mohammad on September 09, 2008 at 21:47:54:
Hi,
I had something come across my desk today that I was hoping someone would help me out with. I have the “tape” that a bank is selling of a portfolio of performing commercial notes. All the notes are performing and are commercial properties such as office buildings, retail centers, etc. The guarantors of the notes all have credit scores above 700 and all the properties are income producing. Well, they are offering to sell this portfolio at 52% of the face value of the notes. The notes cover multiple properties and are about 55% the appraised values of the properties. I have been reading about hypothecation and think that this would be the perfect scenario for it, but I can’t seem to find an investor. If you guys have any ideas or know of a way to do this please let me know. By the way the 2 portfolios are fairly big and none of my private investor sources can take down something like this, these are in the 25MM+ range. If anyone can help me do this I will be more than willing to sign a fee agreement or give up an equity stake.