UPDATE: FDIC Sells Starwood-Led Group 40% Of Corus Asset Pool

A consortium led by Starwood Capital Group purchased a 40% equity stake in a $4.5 billion pool of construction and real-estate loans left over from Corus Bank's failure last month, federal regulators said Tuesday evening.

The Federal Deposit Insurance Corp. said the assets are effectively being valued at 60 cents on the dollar, and as part of the deal the agency will retain a 60% stake in the portfolio of both performing and nonperforming loans. The transaction is being done on a 1-to-1 leverage basis, with equal shares of debt and equity of nearly $1.39 billion.

The FDIC will guarantee the debt issued as part of the transaction, and will provide a $1 billion credit facility to provide cash flow for the completion of some of the real-estate projects included in the portfolio.

The Starwood-led consortium, which was one of eight bids submitted for the portfolio, is also made up of TPG Capital, Perry Capital and WLR LeFrak. The FDIC said the deal is expected to close Oct. 15.

Documents released by the FDIC said the agency's 60% stake in the portfolio is worth $831.6 million. Barclays Capital advised the FDIC on the transaction.

-By Michael R. Crittenden, Dow Jones Newswires; 202-821-2159; [e-mail]