Fairfax Financial to buy majority of PacWest loans sold to Kennedy-Wilson (updated)

Kennedy-Wilson Holdings

05/06/2023 18:32

(Adds shares in paragraph 3 and deal details in paragraph 4)
       June 5 (Reuters) - Canadian insurer Fairfax Financial
Partners  FFH.TO  said on Monday it had agreed to buy a huge
chunk of PacWest Bancorp  PACW.O  real estate loans from
property investment firm Kennedy-Wilson Holdings Inc  KW.N  for
$2.1 billion.
    PacWest had agreed last month to sell 74 real estate
construction loans to Kennedy-Wilson for $2.4 billion and at a
$200 million discount, a regulatory filing showed.
    Toronto-based Fairfax will buy 63 of those PacWest loans,
worth about $2.3 billion, as well as acquire a $200 million
preferred equity stake in Kennedy-Wilson. 
    Fairfax said it will also assume $1.7 billion of future
funding obligations from the loans, which have an average
interest rate of 8.6%.  
    Shares of the regional lender were down nearly 2% to $7.52
on Monday. Its shares have rebounded in tandem with other
regional banks in the past two weeks as investors increasingly
believe the worst of the crisis was largely over and that many
lenders were fundamentally sound. 
   U.S. regional lenders have been selling off some of their
loan assets as they seek to bolster their finances to survive a
banking crisis that erupted in March. 
   Regional banks, the largest lenders to the beleaguered U.S.
CRE and construction markets, have reduced their exposure to the
sector by tightening standards and making fewer loans,
especially in the weeks after the collapse of Silicon Valley
Bank  SIVBV.UL , Signature Bank  SBNY.PK  and First Republic
Bank  FRCB.PK .
        
  

 (Reporting by Mehnaz Yasmin in Bengaluru and Chibuike Oguh in
New York; editing by David Evans)
 ((Mehnaz.Yasmin@thomsonreuters.com;))