Investors Complete Purchases in First Round of FHFA Distressed Property Sales

The Federal Housing Finance Agency (FHFA) announced today that the Cogsville Group, LLC is the second successful bidder in the agency's owned real estate (REO) pilot initiative.  The group has purchased 94 properties held by Fannie Mae in Chicago.  According to FHFA all properties were sold near or above market value.

On September 10 FHFA revealed the first investor group to purchase through the program was Pacifica Companies, LLC which bought 699 Fannie Mae properties in Florida.  At that time FHFA said that 541 properties in Atlanta were not awarded and will be evaluated for disposition through Fannie Mae's retail sales operation or through future structured transactions.

Both sales were described as "Modified Cash Flow (2:1)".  The Pacific transaction had a third party value of $81.5 million and the company paid $12.3 million for its "bidder interest."  The Chicago deal had a third party value of $13.7 million and Cogsville paid $2.1 million.   The remaining structure was described as "10% of equity cash flow shifting to 50% after Shift Threshold".  In the case of Pacific that threshold is $49.31 million and for Cogsville it is $8.39 million.

Pacifica Companies is a privately held real estate developer, investor, owner, and manager located in San Diego, California.  Its portfolio includes hotels, mixed use projects, master planned communities, industrial, office, and retail developments, senior housing, multifamily housing, and single-family communities in the U.S., Mexico, and India.

The Cogsville Group was founded in 2006 by Donald Cogsville, a former member of the U.S. National Soccer Team and the professional San Diego Sockers.  The firm acquires distressed commercial real estate assets and in 2010 acquired the second largest distressed commercial portfolio ($1.8 billion) in the history of FDIC.

FHFA said that Fannie Mae will continue to offer for sale pools of properties in markets across the U.S. and interested investors can continue to qualify as purchasers through the pilot program.