DebtX Sells $306m Non-Performing HUD Portfolio

Boston-based loan sale advisor DebtX sold $306m of non-performing multifamily and healthcare mortgages for the Department of Housing and Urban Development (HUD). DebtX conducted the auction through its KDX Ventures joint venture with Hillsborough, NC-based boutique investment banking firm KEMA Advisors. The transaction, completed in April, drew 67 bidders and more than 200 individual and pool bids for the 26 assets offered for sale. The 12 winning bids generated proceeds of more than 48% of the unpaid principal balance. “The strong proceeds from this HUD sale demonstrate the pent-up demand and liquidity for commercial real estate assets,” said DebtX CEO Kingsley Greenland. “Over the past two years, investors have amassed a tremendous amount of capital to invest in commercial real estate loans, but there has been only a small amount of product available for sale.” The strong investor interest comes as the price of commercial mortgages is continuing to decline. The aggregate value of commercial real estate (CRE) loans that collateralize commercial mortgage-backed securities (CMBS) fell to 75.9% at the end of March, from 76.5% in February, according to data released this week on loans priced by DebtX. DebtX said in March it would sell the HUD portfolio, which consists of 25 multi-family commercial real estate loans ranging in size from $1.6m to $44.3m, as well as one healthcare loan. The collateral is located in 14 states. Write to Diana Golobay.

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