Wachovia Sells Land, Construction Loans to LandCap

August 20, 2008 by · Leave a Comment
Filed under: Real Estate News 

This seems to be a common theme among banks to get the declining value assets of their balance sheet and into some joint-venture or separate entity to help them with write-offs. We should look too see more of this as they get this and other instruments that may be off-balance sheets.

A joint venture created by LandCap Partners is buying $40 million of troubled land and construction loans from Wachovia Corp The Wall Street Journal said. LandCap, a residential-land company headed by real-estate veteran Jeffrey Gault, has created a joint venture that will buy the loans which have a book value of $75 million to $80 million, the paper said citing people familiar with the deal.

The loans are to home developers and collateralized by 2,900 house lots, which are in varying stages of development, in states such as California, Arizona, Florida and Illinois, the paper said.

The paper said many of the loans are in some form of distress because of delinquent payments or plunging values of the collateral. The venture plans to sell foreclosed property to other home builders, the paper said.

“We get it off their balance sheet, and we take on the management duties,” Gault, was quoted by the paper as saying. Wachovia and LandCap could not be immediately reached for comment.

Source: Reuters

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