Competition Tough in Failed Bank Real Estate Asset Auctions

BEVERLY HILLS, California (Reuters) - Bidding on real estate assets of failed banks has become aggressive, as investors searching for distressed opportunities in the sector, wait in vain for property to come to the market. "We were all joking that the distressed cycle lasted about two months," said Barry Sternlicht, chief executive of Starwood Capital Group, at the Milken Institute's Global Conference. "The flow of capital is staggering right now to the property markets, including the debt markets." Starwood, a U.S. private equity firm which has its roots in real estate, teamed up with other investors to buy a pool of assets of failed Corus Bank in October and has been beaten while competing for other assets by wide margins, Sternlicht said. In a recent FDIC auction, Starwood, bid 57 cents on the dollar for the assets, while the winning group bid 81 cents, Sternlicht said.

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