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Starwood-led Consortium Wins Bid For Corus Bank Assets

The purchase price values the assets of Corus at around $2.5 billion

Starwood Capital-led consortium has won the bidding for the assets of Corus Bank and is expected to pay $550m, reported Reuters, quoting The Financial Times.

The paper informed that the purchase price values the assets of Corus at around $2.5 billion. The Chicago-based bank’s condominium loans and other assets have a face value of roughly $5 billion. The Federal Deposit Insurance Corp (FDIC) is running the auction.

The consortium is led by Starwood, a real estate investment firm, and TPG, a private equity firm which has investments in firms such as Harrah’s Entertainment. The two will each have a 40% stake in the consortium’s overall share of the assets.

According to the source, the winning group of investors will have access to around $1 billion in interest-free financing from FDIC, as well as further loans at a subsidized rate and a revolving line of credit.

The group, which includes private equity firm TPG, Wilbur Ross and hedge fund Perry Capital, will receive a management fee of approximately $40m in order to meet expenses.

The winning group is expected to hold a 40% percent in the newly created limited liability corporation and the FDIC is expected hold 60% stake.

Chicago-based Corus Bank has crumbled under the pressure of bad loans on commercial real estate and condominium developments in Arizona, southern California, southern Florida and Nevada. On September 11, 2009, the FDIC seized the bank, a unit of Corus Bankshares, and sold its deposits to MB Financial, leaving the bulk of its assets to be sold later in a private placement, reported the news agency.