Washington Federal Bank (WaFd Bank), a wholly owned subsidiary of WaFd, Inc., has finalized the sale of approximately $2.8 billion in multifamily commercial real estate loans to Bank of America. These loans will subsequently be managed by funds overseen by Pacific Investment Management Company LLC (PIMCO). This transaction is notable as it is the largest non-FDIC assisted commercial real estate loan sale on record. WaFd Bank confirmed that the sale did not result in any loss and provides immediate liquidity for future endeavors.
Brent Beardall, President and CEO of WaFd Bank, emphasized that this transaction illustrates the stability of the commercial real estate loan market. “These are high-quality loans, and the purchase price reflects the minimal credit risk associated with this portfolio,” he noted. The loans were sold at 92% of their principal balance, a discount largely due to interest rate fluctuations rather than loan quality. Commercial real estate encompasses various categories such as multifamily, owner-occupied, industrial, hospitality, storage, and office spaces. Understanding the specific type, location, and sponsor equity of these loans is crucial when assessing CRE risk.
Beardall further explained that the loans originated from Luther Burbank Savings, acquired by WaFd Bank in March. The sale of these loans was not a requirement of the merger. The proceeds from this transaction provide WaFd Bank with several strategic options, including reducing debt, originating new loans, repurchasing stock, or a combination of these actions.
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By Proptechbuzz
By Ravi Kumar
