This case is reserved for use by Columbia Business School Faculty only.
In making its bidding decision on a distressed Bank's real estate portfolio, how should a real estate investment firm value the bank's assets in an uncertain real estate market?
In making its bidding decision on a distressed Bank's real estate portfolio, how should a real estate investment firm value the bank's assets in an uncertain real estate market?
In 2005 and 2006, the condominium market began to deteriorate and Corus's loan portfolio went along with it. Given the leverage level of the Corus loan portfolio, it didn't take much deterioration to create negative equity in the bank. In September 2009, the FDIC took control of Corus Bank, a source of financing for condo developers in areas such as Miami, Atlanta, Chicago, and Phoenix. When the bank was sold, the real estate portfolio was to be auctioned off. Dune Real Estate principals were interested in the portfolio; however, valuing the portfolio was a challenging task: many locations were still declining in the 2009 market, while others were experiencing some recovery. This case asks students to consider the important factors in assessing the portfolio's value and to provide suggestions on possible loan work-out execution strategies for several of its assets.
About the Author(s)
