Bank of America is closing out the year by diving deep into the multifamily sector.
The bank is acquiring $990 million in multifamily commercial real estate loans from Seattle-based HomeStreet, Bloomberg reported. A majority of the loan sale was expected to close on Friday, while the remaining $338 million will close as soon as today.
The price on the loan sale represents about 92 percent of the unpaid principal balance of the debt.
HomeStreet plans on using proceeds from the sale to pay down Federal Home Loan Bank advances and brokered deposits. The bank is coming off four straight quarterly losses, during which time it was saddled with paying more on deposits — the Federal Home Loan Bank debt carries higher interest rates — while earning less on investments; the company lost $7.3 million in the third quarter.
In a statement, HomeStreet chief executive officer Mark Mason said the deal was the first step towards bringing the bank back to profitability early next year. The bank recently terminated a proposed merger with Denver-based FirstSun Capital Bancorp, according to Banking Dive.
Bank of America has made recent investments in corners of commercial real estate that have been ripe for a comeback after significant distress during the height of the pandemic. A couple of months ago, Bank of America led a group of lenders on a $550 million refinancing of a 13-property office portfolio held by Singapore-based Prime US REIT.
Still, the multifamily sector is getting squeezed by floating-rate loans, which surged as the Federal Reserve moved to combat inflation. Apartment loans marked delinquent or in special servicing and financed with commercial mortgage backed securities loans surged by 185 percent in late June from January, according to a report by CRED iQ.
The increase represented the largest jump among any commercial real estate asset over the same period.
— Holden Walter-Warner
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