Fortress buys €96m in real estate NPLs

Asset manager Fortress Investment Group has acquired two portfolios of non-performing real estate loans with a combined face value of around €96 million, Real Estate Capital’s sister title Private Debt Investor reported.

Fortress purchased the books from two banks. Eurocastle Investment Limited, a permanent capital vehicle that is listed on the Euronext Amsterdam Exchange and which Fortress externally manages, acquired a 25 percent stake in the loans, according to a statement.

Funds affiliated with Fortress acquired the remaining 75 percent share of the loans. Its dedicated Italian NPL fund made an investment, a source familiar with the situation said.

First-lien mortgages secure 63 percent of the first portfolio, comprised of 108 borrowers. The second portfolio consists of unsecured residual leasing contracts to 320 borrowers.

In a separate transaction, Eurocastle said it will sell its Zama portfolio in line with its strategy to accelerate recoveries from its legacy real estate assets in Germany. The sale is expected to generate around €3.6 million of net proceeds to Eurocastle and is due to close in the first quarter of 2016.

Eurocastle is a publicly-traded closed-ended investment company focused on investing in Italian distressed debt and real estate. One of its key objectives is to generate mid to high teens returns through opportunistic investments in Italy, according to a presentation by the company.

It also actively manages its legacy business of commercial real estate assets in Germany and other European real estate-related debt.

Fortress completed the acquisition of UniCredit Credit Management Bank last October. Eurocastle acquired a 50 percent share with an equity investment of around €250 million. The purchase included a portfolio of NPLs with a par value of around €2.4 billion and an NPL servicing business.

The servicer, which has been renamed doBank, is the third largest in Italy. doBank has a banking licence and more than €45 billion of assets under management. The transaction included a 10-year servicing contract on future sub-performing and non-performing loans with balances below €1 million and selected assets above €1 million.

Fortress had $74.3 billion in assets under management, as of 30 September 2015.