PacWest to Sell $2.6 Billion Real Estate Loans at Discount

(Bloomberg) — PacWest Bancorp, one of the regional US lenders that was engulfed in turmoil earlier this month, said it agreed to sell a $2.6 billion portfolio of 74 real estate construction loans as part of its plan to shore up liquidity.

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Kennedy-Wilson Holdings Inc. will buy the loans at a discounted price of about $2.4 billion, the company said in a statement Monday. The buyer will also assume all future funding obligations of about $2.7 billion.

Beverly Hills-based PacWest will also sell six more loans to Kennedy-Wilson for about $363 million if it wins certain approvals, it said in a filing Monday.

The transaction is expected to close in tranches during the second quarter and early part of the third quarter this year. The loans carry floating rates, with an average of 8.4%.

The collapse of Silicon Valley Bank and several other regional lenders roiled similar firms across the US, causing shares of PacWest to plunge almost 80% since March 7. Investors were concerned about big unrealized losses on bond investments at some firms, along with high exposure to real estate lending and sinking deposits as customers sought out higher-yielding alternatives.

PacWest announced it was in talks with potential investors and that it would sell assets to bolster its finances earlier this month.

Shares of the bank jumped as much as 6.1% to $6.08 in premarket trading in New York and were at $5.95 as of 7:01 a.m. local time.

(Updates with transaction closing period and premarket shares.)