Fairfax Financial to buy majority of PacWest loans sold to Kennedy-Wilson
2023.06.05 13:55
© Reuters. FILE PHOTO: A general view of Pacific Western Bank in Huntington Beach, California, U.S., March 22, 2023. REUTERS/Mike Blake
(Reuters) – Canadian insurer Fairfax Financial Partners said on Monday it had agreed to buy a huge chunk of PacWest Bancorp real estate loans from property investment firm Kennedy-Wilson (NYSE:) Holdings Inc for $2.1 billion.
PacWest had agreed last month to sell 74 real estate construction loans to Kennedy-Wilson for $2.4 billion and at a $200 million discount, a regulatory filing showed.
Toronto-based Fairfax will buy 63 of those PacWest loans, worth about $2.3 billion, as well as acquire a $200 million preferred equity stake in Kennedy-Wilson.
Fairfax said it will also assume $1.7 billion of future funding obligations from the loans, which have an average interest rate of 8.6%.
Shares of the regional lender were down nearly 2% to $7.52 on Monday. Its shares have rebounded in tandem with other regional banks in the past two weeks as investors increasingly believe the worst of the crisis was largely over and that many lenders were fundamentally sound.
U.S. regional lenders have been selling off some of their loan assets as they seek to bolster their finances to survive a banking crisis that erupted in March.
Regional banks, the largest lenders to the beleaguered U.S. CRE and construction markets, have reduced their exposure to the sector by tightening standards and making fewer loans, especially in the weeks after the collapse of Silicon Valley Bank, Signature Bank (OTC:) and First Republic Bank (OTC:).
