Pacific Western Begins $5.7B Loan Sale

Pacific Western Bank has begun selling a portfolio of real estate and construction loans totalling more than $5.7 billion.

Insurance and investment group Fairfax Financial and real estate investment company Kennedy Wilson have begun purchasing loans from Pacific Western Bank in a series of transactions, according to a statement issued last week.

The first tranche of the loan sales was acquired by Fairfax and Kennedy Wilson for $1.6 billion, with a further tranche due to be transacted by the end of July for approximately $800 million.

Pacific Western has been seeking to sell parts of its loan portfolio since the start of this year, along with other assets as it overhauls its balance sheet. The planned sales include $2.7 billion worth of loans from its Lender Finance portfolio, according to a statement from the bank in May, although it is not clear whether these are included in the Fairfax and Kennedy Wilson transactions.

Last month, the bank said it was refocusing its strategy on community banking and its HOA business, while exiting “non-core” products.

Pacific Western’s president and CEO Paul Taylor said last week: “We appreciate our long-standing relationship with Kennedy Wilson and are pleased to partner with them to successfully execute this asset sale. This transaction will improve our liquidity and capital as we continue to implement our announced strategy to return our focus to relationship-based community banking.”

Fairfax is to take a 95% interest in the loans, with Kennedy Wilson owning the rest and hiring some staff from Pacific Western to help manage the portfolio.

Matt Windisch, executive vice president at Kennedy Wilson, said the purchase “strategically positions our private credit platform for substantial future growth”. He added: “We look forward to welcoming members of the Pacific Western Bank team to Kennedy Wilson as we further strengthen our debt capabilities and capacity.”