WaFd Divulges More on $2.8B Multifamily Sale

"The purchase price is reflective of the low amount of credit risk in the portfolio."

Washington Federal Bank, or WaFd Bank, the wholly owned subsidiary of WaFd, Inc. has closed on the sale of approximately $2.8 billion of multifamily commercial real estate loans to Bank of America, which in turn is selling the loans to funds managed by Pacific Investment Management Company.

According to a regulatory filing by parent company WaFd, the 2,000 multifamily loans have a current unpaid principal balance of $3.2 billion and the sale is being facilitated in a bid by the regional lender to scale down its exposure to the commercial real estate sector.

Little else was said at the time of the regulatory filing but with the deal now closed WaFd Bank is commenting on the sale, which it says represents the largest non-FDIC assisted CRE loan sale ever to its knowledge. It also noted that the sale of the multi-family loans was executed at no loss to WaFd.

WaFd Bank President and CEO Brent Beardall noted that these are high quality loans and "we believe the purchase price is reflective of the low amount of credit risk in the portfolio. Further, this sale was executed at 92-percent of principal balance. That discount is almost entirely attributable to changes in interest rates, not the quality of these CRE loans."

Beardall also reported that these packaged loans all came from Luther Burbank Savings in the acquisition by WaFd Bank in March of this year and that the sale of CRE loans was not a condition of the merger. "WaFd Bank has previously disclosed this loan sale gives the bank several immediate options including the option to either buy down debt, originate new loans, buyback stock or a combination of all three."

Source: GlobeSt/ALM