本文发表在 rolia.net 枫下论坛By LINGLING WEI and ANTON TROIANOVSKI
Dozens of real-estate funds and other investors hoping to buy into the $700 billion bailout may need to take on the government as a partner.
One idea being considered by Treasury officials working on the rescue plan is to sell big packages of toxic debt to ventures owned partly by investors and partly by the government, as opposed to selling directly to the private sector, according to executives who have talked to senior government officials.
Of course, the government first has to buy the illiquid assets which have helped to put the financial system into gridlock by tying up the capital of dozens of major financial institutions.
The Treasury hasn't yet determined how it's going to do this or what it's going to pay, although a "reverse auction" is a leading possibility.
But once the Treasury gets its hands on the assets it will be trying to move many of them back to the private sector as quickly as possible. That's where the joint-venture plan comes in.
Modeled on some 70 such deals pioneered by the Resolution Trust Corp. during the last real-estate collapse, the so-called equity partnerships would ensure that taxpayers get a piece of the action.
It also would reduce the amount of equity investors would have to put into deals and might even exempt private investors from what they often view as cumbersome federal oversight.
The government "could recoup part of its capital outlay and still have the opportunity to make money on behalf of the taxpayer should the securities appreciate in value," says Jeff Furber, chief executive of AEW Capital Management, which was among those who teamed up with the RTC. "It's sharing of capital, and capital is very precious right now," he says.
A Treasury spokeswoman declined to comment on specific plans but noted that the legislation Congress passed last week "has given the secretary broad authority to use other tools."
The joint ventures would enable the Treasury to sell assets quickly because, under the structure being discussed, the Treasury would finance the partnership. In other words, if a pool of assets was sold for, say, $5 billion, the private partners might put up $1 billion and the Treasury would essentially lend the partnership the other $4 billion.
This is known in the real-estate industry as "seller financing." Many of the few commercial-property sales that have gotten done in recent months have used this model because conventional financing has practically vanished.
Experts predict the Treasury will endorse the partnership idea because the legislation passed by Congress last week requires it to "encourage the private sector" to participate in the troubled assets relief program, dubbed as TARP. "If you look at the TARP legislation, the government is anxious for this not to be a one-way street," says Roy March, chief executive of Eastdil Secured, a combination of two real-estate investment banking firms that advised the RTC on valuing assets and structuring deals.
There is no shortage of investors interested in buying the distressed assets from the government. "A lot of very smart people are exploring where the opportunities are in this," says J. Philip Rosen, who heads the real estate group at Weil, Gotschal & Manges LLP.
But most of these investors will be seeking a leveraged return, something almost impossible these days because of the scarcity of credit.
Write to Lingling Wei at lingling.wei@dowjones.com and Anton Troianovski at anton.troianovski@wsj.com更多精彩文章及讨论，请光临枫下论坛 rolia.net
Dozens of real-estate funds and other investors hoping to buy into the $700 billion bailout may need to take on the government as a partner.
One idea being considered by Treasury officials working on the rescue plan is to sell big packages of toxic debt to ventures owned partly by investors and partly by the government, as opposed to selling directly to the private sector, according to executives who have talked to senior government officials.
Of course, the government first has to buy the illiquid assets which have helped to put the financial system into gridlock by tying up the capital of dozens of major financial institutions.
The Treasury hasn't yet determined how it's going to do this or what it's going to pay, although a "reverse auction" is a leading possibility.
But once the Treasury gets its hands on the assets it will be trying to move many of them back to the private sector as quickly as possible. That's where the joint-venture plan comes in.
Modeled on some 70 such deals pioneered by the Resolution Trust Corp. during the last real-estate collapse, the so-called equity partnerships would ensure that taxpayers get a piece of the action.
It also would reduce the amount of equity investors would have to put into deals and might even exempt private investors from what they often view as cumbersome federal oversight.
The government "could recoup part of its capital outlay and still have the opportunity to make money on behalf of the taxpayer should the securities appreciate in value," says Jeff Furber, chief executive of AEW Capital Management, which was among those who teamed up with the RTC. "It's sharing of capital, and capital is very precious right now," he says.
A Treasury spokeswoman declined to comment on specific plans but noted that the legislation Congress passed last week "has given the secretary broad authority to use other tools."
The joint ventures would enable the Treasury to sell assets quickly because, under the structure being discussed, the Treasury would finance the partnership. In other words, if a pool of assets was sold for, say, $5 billion, the private partners might put up $1 billion and the Treasury would essentially lend the partnership the other $4 billion.
This is known in the real-estate industry as "seller financing." Many of the few commercial-property sales that have gotten done in recent months have used this model because conventional financing has practically vanished.
Experts predict the Treasury will endorse the partnership idea because the legislation passed by Congress last week requires it to "encourage the private sector" to participate in the troubled assets relief program, dubbed as TARP. "If you look at the TARP legislation, the government is anxious for this not to be a one-way street," says Roy March, chief executive of Eastdil Secured, a combination of two real-estate investment banking firms that advised the RTC on valuing assets and structuring deals.
There is no shortage of investors interested in buying the distressed assets from the government. "A lot of very smart people are exploring where the opportunities are in this," says J. Philip Rosen, who heads the real estate group at Weil, Gotschal & Manges LLP.
But most of these investors will be seeking a leveraged return, something almost impossible these days because of the scarcity of credit.
Write to Lingling Wei at lingling.wei@dowjones.com and Anton Troianovski at anton.troianovski@wsj.com更多精彩文章及讨论，请光临枫下论坛 rolia.net